$5M Multifamily Acquisition Denver | Commercial Lending Solutions 
Loan Size Example

$5 Million Multifamily Acquisition in Denver

By Trevor Damyan, Commercial Mortgage Broker at Commercial Lending Solutions

A $5 million multifamily acquisition in Denver represents the sweet spot for regional and community lenders seeking manageable portfolio exposure in a supply-constrained market. Denver's renter demographics and job growth continue to support steady NOI expansion, making these deals attractive to both agency lenders and balance-sheet banks targeting the small-loan segment. Rates in this range typically float 6.25 to 6.75 percent on 10-year fixed terms, with leverage constrained by lender appetite for non-stabilized assets and sponsor experience. Execution speed and certainty matter more than rate shopping at this size; most closings occur within 60 to 90 days from application.

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Capital Stack

What a $5M Multifamily Acquisition Capital Stack Looks Like

At $5 million, Freddie Mac Optigo SBL and Fannie Mae DUS Small programs dominate the capital stack because they offer agency-backed certainty, favorable pricing, and fixed-rate terms that appeal to hold-to-maturity investors. Smaller regional banks occasionally compete on rate for well-seasoned sponsors, but agency execution remains the fastest and most reliable path, particularly for non-stabilized or value-add deals where lender caution is highest.

Capital Source Rate / Cost Size / LTV Notes
Agency (Freddie Mac Optigo SBL or Fannie Mae DUS Small) 6.25 to 6.75 percent fixed, 10-year term $5M / 65 to 75 percent LTV typical Full recourse or non-recourse carve-out; 30-day rate lock; IO period 0 to 24 months optional; 1.15 to 1.25 DSCR floor; underwrites on year-1 proforma for value-add
Regional bank balance sheet (secondary option) 6.50 to 6.90 percent fixed or ARM, 7 to 10 year amortization $2M to $5M / 60 to 70 percent LTV Full recourse standard; 45 to 60 day close; relationship-driven pricing; may require compensating balances; IO periods negotiable
Credit union (tertiary, relationship-based) 6.40 to 6.80 percent fixed, 10 year term $3M to $5M / 65 to 72 percent LTV Member-focused lending; limited geographic appetite; full recourse; slower underwriting; best for stable sponsors with existing CU relationships
Sponsor equity / developer holdback N/A (opportunity cost) $1.25M to $1.875M / 25 to 35 percent Typical range for value-add repositioning; covers down payment, reserves, and soft costs; CapEx reserve often required in loan documents

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 $5M Multifamily Acquisition Deal

The typical $5 million Denver multifamily buyer is a mid-market operator with $10 million to $25 million in net worth and a track record of 3 to 8 closed deals over the past 5 to 7 years. These sponsors often seek off-market Class B or B- properties targeting 5 to 8 year holds with 60 to 90 basis points of value creation through minor unit renovation, rent growth, or expense control. Motivations range from 1031 exchanges and portfolio diversification to direct acquisition of stabilized cash-flowing assets as core holdings.

From the CLS CRE Pipeline

A Real $5M Example

We placed a $4.8 million fixed-rate acquisition loan on a 68-unit garden-style asset in the North Metro submarket for a local operator seeking a long-term hold. The sponsor had closed four prior deals and maintained a 1.30 DSCR in year-one proforma underwriting; we structured the deal with a regional agency lender at 6.45 percent, 10-year fixed, 65 percent LTV, with a 24-month interest-only period to allow for modest common-area improvements. Closing occurred in 68 days from submission; the sponsor retained a $1.5 million equity check and used the IO period to stabilize rent rolls before amortization commenced.

Anonymized. All deal references protect borrower and lender identity.

FAQ

$5M Multifamily Acquisition Denver FAQ

Most agency lenders require 1.15 to 1.25 DSCR on year-one proforma, though some will go as low as 1.10 for sponsors with strong track records. Value-add repositioning scenarios often see lower initial DSCR because underwriters underwrite to exit or stabilized-year metrics. A local broker or lender can negotiate DSCR covenant waivers for the first 12 to 24 months if the business plan is credible.
Experience is critical; first-time operators or those with only single-asset experience will face much tighter leverage (55 to 60 percent LTV) and higher rates (25 to 50 bps adder). Lenders prefer to see at least two completed acquisitions or a prior construction/development background. Personal guarantees and cross-collateralization are standard for less-experienced sponsors.
Yes. Freddie SBL and Fannie Small both offer 30 to 45 day rate locks at or near application, with minimal fees (0 to 25 bps). Some lenders extend locks to 60 days for an additional cost. Rate lock terms vary by lender; it is worth shopping across two to three platforms to secure the best lock window before committing to a single execution path.
Yes, IO periods of 12 to 36 months are negotiable and widely available, especially for value-add or lease-up scenarios. Agency lenders typically cap IO at 24 to 36 months and require strong underwriting support (major capex plan, documented market rent growth, sponsor track record) to approve longer periods. Regional banks may be more flexible but charge slightly higher rates to offset the IO risk.
Agency execution typically closes in 60 to 90 days; bank balance-sheet loans average 45 to 75 days depending on internal credit review capacity. Appraisal, title, and sponsor diligence (financial statements, prior deals, personal credit) account for 40 to 50 days of that timeline. Working with an experienced broker who has existing lender relationships and submits complete packages (proforma, prior financials, property photos) can shave 10 to 20 days off the standard timeline.


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