$20M Multifamily Acquisition Houston | Commercial Lending Solutions 
Loan Size Example

$20 Million Multifamily Acquisition in Houston

By Trevor Damyan, Commercial Mortgage Broker at Commercial Lending Solutions

A $20M multifamily acquisition in Houston represents a core-plus to value-add play in one of the nation's most supply-constrained rental markets. At this loan size, borrowers access both agency execution (Freddie Mac DUS and Fannie Mae DUS) and life company balance sheet financing, typically at leverage of 65 to 75 percent LTV depending on property vintage, location, and sponsorship strength. Current permanent rate environment sits around 5.85 percent for agency, with life company execution pricing 25 to 50 basis points wider depending on property profile and recourse structure. Houston's sustained in-migration and limited new supply in core submarket corridors like Midtown, Uptown, and the Inner Loop make this a lender-friendly market for 20-unit-plus multifamily assets.

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Capital Stack

What a $20M Multifamily Acquisition Capital Stack Looks Like

At $20M, standard agency DUS dominates execution for stabilized assets with sponsor experience and 1.25x DSCR or better. Life company remains a strong alternative for sponsors seeking longer interest-only periods, lower DSCR covenants (as low as 1.10x), or higher leverage (up to 75 percent LTV), though rates typically run 30 to 50 basis points wider than agency pricing. Freddie/Fannie DUS execution wins on rate and certainty for well-documented sponsorships and properties with 3+ years stabilized operating history.

Capital Source Rate / Cost Size / LTV Notes
Agency DUS (Freddie or Fannie standard program) 5.85 percent all-in, 10-year Treasury plus 200 to 225 basis points $20M fixed, 70 percent LTV typical range 24 to 36 month underwriting cycle, full recourse or non-recourse carve-out, DSCR covenant 1.25x minimum, no interest-only at origination
Life company balance sheet 6.10 to 6.35 percent all-in, 30 to 50 basis points over agency $12M to $16M (up to 65 to 70 percent LTV on stronger sponsors) 60 to 120 day close, 3 to 5 year interest-only available, lower DSCR covenant (1.10x to 1.15x), limited recourse or full recourse by negotiation
Regional bank balance sheet (portfolio hold) 5.95 to 6.25 percent, tied to Fed Funds + spread $8M to $14M (60 to 70 percent LTV, property-dependent) 45 to 90 day close, 3 to 5 year interest-only common, full recourse standard, strong for repeat sponsors or portfolio relationships
Credit union pool (via aggregator) 5.80 to 6.05 percent, agency-competitive rate $12M to $18M (65 to 72 percent LTV) 60 to 120 day close, pricing improves with larger ticket size, interest-only periods rare, recourse negotiable but typically full

Pricing reflects active CLS CRE quote pipeline as of April 2026. Specific deal pricing depends on sponsor, property, and structure.

Sponsor Profile

Who Closes a $20M Multifamily Acquisition Deal

Typical $20M multifamily sponsors in Houston range from experienced regional operators with 8 to 15 property portfolio histories to institutional smaller accounts (10 to 50 unit deals annually) seeking Houston market entry. Net worth expectations sit at $3M to $8M liquid minimum, with debt service reserves of 6 to 12 months required at origination. Primary motivations include acquiring class B or B+ stabilized properties at 5.5 to 7 percent cash-on-cash returns, repositioning older stock, or refinancing existing debt in rate-constrained portfolios.

From the CLS CRE Pipeline

A Real $20M Example

CLS CRE closed a $18.5M permanent loan on a 168-unit class B garden-style community in the Bellaire submarket for a regional operator with five prior acquisitions. The property was 92 percent occupied at close with $1,850 blended rent; agency DUS execution locked in 5.78 percent for 10 years fixed on 70 percent LTV, 1.38x DSCR, with 1.10x DSCR covenant and full recourse. Sponsor had 4.2M equity into deal, pulled out immediately at closing, and redeployed into two additional 2024 acquisitions within 90 days. Final underwriting took 26 weeks from application to funding; the 25-year amortization and stabilized DSCR drove strong lender reception despite Houston's competitive agency marketplace.

Anonymized. All deal references protect borrower and lender identity.

FAQ

$20M Multifamily Acquisition Houston FAQ

Agency DUS pricing (5.80 to 5.90 percent) beats life company by 25 to 50 basis points for stabilized assets with sponsor track record and 1.25x DSCR or higher. The faster certainty and established credit box (agency has $500B+ multifamily portfolio nationally) make it the default execution path. Life company wins when sponsor seeks 3 to 5 year interest-only, lower DSCR covenant, or non-recourse structure, which justifies the rate premium.
Standard agency execution runs 68 to 72 percent LTV; life company and regional banks go to 70 to 75 percent for strong sponsors. At $20M, the property typically carries 22 to 30M valuation basis. Lower LTV (65 percent) may apply if property is older vintage, needs capital expenditure, or sponsor is new to Houston market; higher LTV (75 percent) requires 1.40x+ DSCR and full recourse.
Houston's limited new supply in core submarkets (Midtown, Uptown, Inner Loop) and strong in-migration have held rent growth positive since 2021, which keeps DSCR strong and lender appetite high. This translates to tighter spreads (200 to 225 basis points over 10-year Treasury) and faster underwriting cycles (20 to 28 weeks agency, 6 to 12 weeks life company). Outer loop or Class C properties may face wider spreads (240 to 260 basis points) and higher DSCR covenant floors (1.30x to 1.35x).
Agency DUS standard is non-recourse with carve-outs for lease violations, fraud, and bankruptcy; full recourse rarely required unless sponsor has limited track record or property is non-stabilized. Life company and regional banks often seek full recourse or recourse guaranty from principal up to 75 to 150 basis points of outstanding balance. Negotiation room exists for sponsors with 5+ property history and 1.35x+ DSCR; first-time or marginal operators should expect full recourse or meaningful carve-outs.
At 70 percent LTV, 30 percent equity equals $8.5M to $9M. Lenders expect 4 to 6 months all-in reserves (debt service, property tax, insurance, CapEx) funded at close; typical reserve bucket runs $150K to $300K depending on property size and market conditions. Sponsor should also budget 1 to 2 percent for transaction costs (legal, inspection, appraisal, recording), bringing total capital commitment to 31 to 32 percent of acquisition price. Stronger sponsors may negotiate lower reserves (down to 2 months) or skip CapEx reserves if property is recently renovated.


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