Texas has a large stock of small 1960s to 1980s apartment buildings, from sixplexes in older Dallas and Houston neighborhoods to fourplex clusters and small complexes in San Antonio and Austin. In this state, the tax bill usually matters more than the rate.
In short: You can finance a 5 to 8 unit building in Texas with a LendingStreet DSCR loan that qualifies on rent, from $150,000 with no stated maximum and 30-year terms available. The rent has to cover principal, interest, taxes and insurance at 1.0x on standard programs, and sub-1.0 programs exist. Texas has no state income tax, so property taxes are high, and investors do not get homestead exemptions, which makes the tax line the one that decides most files.
In Dallas, small buildings sit in East Dallas, Lower Greenville, Oak Lawn and Oak Cliff. Fort Worth has them near TCU, the Near Southside and Arlington Heights. Houston has small complexes in Montrose, the Heights, Midtown and near the University of Houston, often with no zoning restrictions on what was built nearby.
San Antonio has small buildings near downtown, Alamo Heights and the Medical Center, plus military-related demand near Joint Base San Antonio. Austin has fourplex and sixplex clusters in Hyde Park, North Loop, Riverside and near the University of Texas, at high prices. El Paso, Lubbock, Waco and Killeen have more moderate prices.
| Area | Typical buildings | What to check |
|---|---|---|
| Dallas, Fort Worth | 1960s to 1980s small buildings | Tax rate, hail, foundation |
| Houston | Small complexes inside the Loop | Flood history, insurance |
| Austin, San Antonio | Fourplex clusters and sixplexes | High prices in Austin; military demand in San Antonio |
Start with the rent roll. Add the in-place rent for each unit and, for any vacant unit, a market rent the appraiser can support. Then divide by the full payment, including taxes and insurance. That ratio needs to be 1.0x or higher on standard programs.
Utilities the owner pays, such as common-area electric, water, sewer and trash, are not part of the DSCR payment on most programs, but they are part of your real cash flow. Budget for them separately so the deal still works after the loan closes, not just on the term sheet.
Leverage on 5 to 8 units varies by program and is often below the 80% purchase maximum available on smaller rentals. Cash-out refinances go up to 75% LTV, and seasoning rules vary. If the ratio comes in short, lowering the loan amount or using a sub-1.0 program are the usual fixes.
| Term | What to expect |
|---|---|
| Property type | 5 to 8 unit residential rental |
| Loan amount | From $150,000, no stated maximum |
| Purchase LTV | Up to 80% on some programs; often lower on 5-8 units |
| Cash-out LTV | Up to 75%; varies by program |
| Minimum DSCR | 1.0x standard; sub-1.0 programs exist |
| Credit score | 620 minimum |
| Income documents | None; qualifies on rent |
| Borrower | LLC standard; sign for the loan personally |
North and Central Texas see frequent hail, and insurers price roofs carefully, often with percentage-based wind and hail deductibles. The Gulf Coast faces hurricane and wind risk, and some coastal areas need windstorm coverage through the state wind pool.
Houston has a long history of flooding, including Harvey in 2017, and some neighborhoods flood outside mapped zones. Check the flood map and ask for flood history. Clay soils in many parts of Texas also make foundation condition a common inspection item.
Texas funds local government and schools largely through property taxes, and a single property can be taxed by the county, city, school district, community college, hospital district and special districts. The combined rate is high compared with many states.
Homestead exemptions and appraisal caps for homes apply only to a primary residence, so an investor pays on the full appraised value. Texas does not charge a transfer tax, which helps closing costs, but the tax bill after purchase is often much higher than the seller's. Budget on the full combined rate.
This example is illustrative and not a quote. An investor buys a San Antonio six-unit building for $900,000. Each unit rents for about $1,100 a month, so gross rent is $6,600. Property taxes are budgeted at $1,650 a month and insurance at $500. The owner also pays about $350 a month in utilities and common-area costs, which affect cash flow but are not part of the DSCR payment.
At 75% LTV the loan is $675,000. On 30-year amortization, principal and interest is about $4,720, so the payment with taxes and insurance is about $6,870 and the DSCR is about 0.96x.
That is below the 1.0x standard minimum. At 70% LTV the loan drops to $630,000, principal and interest is about $4,405, the payment is about $6,555 and the DSCR rises to about 1.01x. The investor brings $45,000 more to closing.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Purchase price | $900,000 | $900,000 |
| Gross monthly rent | $6,600 | $6,600 |
| Loan amount | $675,000 | $630,000 |
| Principal and interest | $4,720 | $4,405 |
| Property taxes | $1,650 | $1,650 |
| Insurance | $500 | $500 |
| Monthly payment (PITI) | $6,870 | $6,555 |
| DSCR | About 0.96x | About 1.01x |
Texas law does not allow local rent control, and the Texas Property Code sets rules for deposits, repairs and notices. Evictions go through justice of the peace courts.
Some cities, including Dallas and Austin, have rental registration or inspection programs for multifamily buildings. Check with the city. Most 5 to 8 unit buildings are underwritten on 12-month leases.
In Austin and the most popular Dallas and Houston neighborhoods, high prices and high taxes combine to make the ratio tight, and leverage often has to come down. In San Antonio, El Paso, Lubbock, Waco and Killeen, prices per unit are more moderate, and ratios often work at standard leverage.
In every Texas market, start with the full tax figure, then the insurance quote, then the rent. That order tells you quickly whether the building can carry the loan you want.
Most delays on small apartment loans come from missing items. Start with these.
Our investor loans are business-purpose loans on non-owner-occupied property. Tell us about the building: address, unit mix, rents, taxes, insurance and the loan you have in mind. We will run the numbers, flag any local issues that could affect the file and give you options. Fill out the form below or call (877) 298-1001.
Nine or more units is commercial financing, covered on our multifamily loans page.
Usually because of property taxes. Investors do not get homestead exemptions, so the bill after purchase is often much higher than the seller's.
No. Texas does not charge a real estate transfer tax, but property taxes are high.
If it is in a mapped flood zone, flood insurance is generally required. Many Houston owners carry it even outside those zones.
No. State law does not allow local rent control.
The standard minimum is 1.0x, meaning rent covers principal, interest, taxes and insurance. Sub-1.0 programs exist for buildings that fall a little short.
Yes. LLC borrowers are standard. You will sign for the loan personally, and you will need the LLC's formation documents and operating agreement.
Yes. Cash-out goes up to 75% LTV, often lower on 5 to 8 units, and the rent has to cover the new payment at the program minimum. Seasoning rules vary by program.
Our DSCR programs have no stated maximum. Loans start at $150,000, and larger balances are reviewed case by case, often with lower maximum LTV.
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