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

$5 Million Multifamily Acquisition in Houston

By Trevor Damyan, Commercial Mortgage Broker at Commercial Lending Solutions

A $5 million multifamily acquisition in Houston represents the sweet spot for agency execution, targeting stabilized garden-style or mid-rise apartments in core submarkets like Midtown, Uptown, or the Energy Corridor. Houston's robust apartment demand, driven by corporate relocation and population growth, supports strong underwriting fundamentals at this loan size. Lenders compete aggressively at this level, with rates in the 6.50 to 6.75 percent range for 10-year fixed terms and leverage capped at 70 to 75 percent LTV. Borrowers appreciate the speed of execution and certainty of terms, though appraisal discipline and occupancy requirements remain tight.

Get a Quote on Your $5M Deal →
Capital Stack

What a $5M Multifamily Acquisition Capital Stack Looks Like

Freddie Mac Optigo SBL and Fannie Mae DUS Small programs dominate the $5 million acquisition market in Houston, offering streamlined underwriting and predictable execution timelines. Selection typically hinges on borrower net worth, reserve requirements, and property location within the Houston metro, with Freddie SBL favored for experienced sponsors seeking maximum leverage and Fannie Small preferred by broader operator profiles.

Capital Source Rate / Cost Size / LTV Notes
Agency (Freddie Mac Optigo SBL or Fannie Mae DUS Small) 6.50 to 6.75 percent fixed for 10-year term $5M / 70 to 75 percent LTV 100 percent non-recourse with full carve-outs; 1 to 2 month execution window; no prepayment penalty after year 1; requires 0.85 to 1.10x DSCR minimum
Regional bank balance sheet 6.35 to 6.60 percent fixed for 7 to 10 year term $5M / 65 to 72 percent LTV Partial recourse typical; faster closing (2 to 3 weeks); flexibility on reserve requirements; common for sponsors with existing bank relationships in Houston
Life company portfolio 6.70 to 6.95 percent fixed for 10 to 12 year term $5M / 60 to 70 percent LTV 3 to 6 month execution window; full appraisal and property inspection; interest-only period 1 to 2 years available; lower recourse pressure than agencies
Credit union or community lender 6.45 to 6.80 percent fixed for 5 to 10 year term $5M / 65 to 75 percent LTV Local decision-making; relationship-driven pricing; partial recourse; quick turnaround for strong sponsors; limited volume but competitive for owner-operators

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

Typical $5 million multifamily borrowers range from emerging local operators with $2 to $5 million net worth and 3 to 5 prior acquisitions to more seasoned regional players with $10+ million net worth managing 10 to 20 unit portfolios. Motivations split between acquisition of undervalued stabilized properties, small value-add plays targeting 5 to 15 percent rent upside, and occasional refinances of existing Houston holdings to pull equity. Most have W-2 income or strong liquidity to support reserves and demonstrate Houston market knowledge.

From the CLS CRE Pipeline

A Real $5M Example

CLS CRE closed a $4.85 million Freddie Mac SBL financing on a 98-unit garden-style property in the Bellaire submarket in Q3 2025. The sponsor, a 15-year operator with prior Houston experience, refinanced an existing 5-year note and locked a 6.58 percent fixed 10-year rate at 72 percent LTV with 1.02x DSCR. The lender required 6 months DSCR and 1 year property tax reserves; the borrower closed in 35 days and achieved full non-recourse status via full carve-out waivers. The property was 94 percent occupied at execution and the sponsor immediately implemented a $500 per unit rent growth program, reaching stabilized performance within 90 days.

Anonymized. All deal references protect borrower and lender identity.

FAQ

$5M Multifamily Acquisition Houston FAQ

Agency lenders (Freddie and Fannie) typically offer 70 to 75 percent LTV for stabilized properties in Houston with occupancy above 90 percent. Bank lenders may go slightly lower at 65 to 72 percent LTV, while life companies tend to stay at 60 to 70 percent LTV. LTV can vary by submarket (inner loop properties command higher leverage) and borrower profile.
Agency programs execute in 4 to 8 weeks from application to closing, depending on appraisal and underwriting complexity. Bank balance sheet lenders can close in 2 to 3 weeks for repeat borrowers. Life companies require 8 to 12 weeks due to full appraisal, physical inspection, and committee review processes.
Most agencies require a minimum 1.00x to 1.10x DSCR at underwriting, with 0.85x to 0.95x as a loan covenant floor. Bank lenders typically mirror agency standards but may loosen for strong, local sponsors. Life companies often accept slightly lower trailing DSCR (0.90x to 1.00x) due to longer hold periods and portfolio approach.
Interest-only is standard only through life company and some regional bank programs, typically 1 to 2 years of the loan term. Agency lenders do not offer interest-only periods at this size. IO periods may be embedded as part of a 10 to 12 year life company structure for sponsors planning near-term value-add rollout.
Agency (Freddie and Fannie) financing is fully non-recourse with standard carve-outs (fraud, environmental, lease violations). Bank lenders typically request partial recourse or a personal guarantee from primary sponsors. Life company loans often have no recourse but may require stronger liquidity and reserves as credit substitutes.


Get a Quote on Your $5M Deal

Tell us about your transaction. We will run it past lenders that actively fund this size and product type and send back terms within 48 hours.

Apply for Financing →
Or call us: 310.708.0690

Weekly Market Intelligence

Rate updates, deal insights, and capital markets analysis. One email per week. Unsubscribe anytime.

No spam. No selling your data. Just market intelligence from a working broker.

Need financing? Apply in 2 minutes. Response within 24 hours.
Apply Now →
📈

Before You Go…

Get matched with the right lender from our network of 1,000+ capital sources.

Or call us: 310.708.0690

No spam. Unsubscribe anytime.