Apartment Mortgage Loan

An Apartment mortgage loan is the financing used to buy or refinance an apartment property. Lenders consider various facets of the property, including NOI (net operating income) and debt coverage ratio (DSCR), to determine whether it’s suitable for apartment financing.


Using a multifamily mortgage calculator can help you compare the different options for investment properties, including their interest rates, loan to value and debt to income maximums, and whether they’re recourse or nonrecourse.

RCN Capital

RCN Capital is a leading national private lender offering short-term and long-term apartment mortgage loan solutions. It has a variety of different programs that are designed for investors looking to flip properties or hold them for rental income. Its loan program options include bridge loans, multifamily mortgages, and commercial hard money loans.

Its residential property loan calculator is a handy tool for potential borrowers and investors to determine the affordability of an apartment home purchase or refinance. This calculator shows the proportion of principal versus interest payments over the life of the mortgage. It also includes an amortization schedule that shows the loan balance reducing over time.

For borrowers looking to buy or refinance a larger apartment building, the lender will need to see that annual net operating income can cover the mortgage payment, ideally by at least 1.2 times. This metric is known as the debt coverage ratio, or DSCR. It can be more challenging to meet than a single-family residence, which only requires a minimum of 5-10% down.

Government-backed apartment loans follow guidelines from one of three entities: the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Federal Housing Administration. These loans are the most regulated, and can take longer to fund. However, they protect borrowers from excessive rates and fees.

Government-Backed Loans

If your credit scores or debt-to-income ratios make it difficult to obtain financing with a conventional mortgage, government-insured loans may be an option. These loans are backed by the government through a private lender and offer more flexible requirements than conventional mortgages. They are a good choice for first-time buyers and many others in similar situations. There are several government-backed home loan options, including those from the Federal Housing Administration, U.S. Department of Veterans Affairs, and U.S. Department of Agriculture. They are usually easier to qualify for than conventional loans and have lower down-payment requirements.

The primary benefit of government-backed loans is that they allow lenders to extend mortgages to individuals with less-than-desirable credit scores and higher debt-to-income ratios than a traditional mortgage could afford. This type of loan is often an excellent fit for military members, borrowers with a limited income, or those looking to purchase homes in rural areas.

Most government-backed mortgages are considered nonconforming, which means they don’t meet the guidelines set by Fannie Mae and Freddie Mac. Conventional loans, on the other hand, do conform to these guidelines. To find out whether a specific loan meets the guidelines set by these two mortgage-backed enterprises, you can use their lookup tools or call your lender to ask. Alternatively, you can talk to a mortgage broker. They are better suited to provide advice tailored to your unique circumstances.


HUD and FHA are terms home buyers often hear without fully understanding. The Department of Housing and Urban Development oversees the Federal Housing Administration, which insures mortgage loans for people who can’t afford a high down payment or have less-than-perfect credit. It also manages programs to support homeownership, increase safe and affordable rental housing, and fight discrimination.

The FHA doesn’t lend money directly to homebuyers; instead, it issues Section 222 loans to private lenders and then insures them against loss if borrowers default on the loan. This allows FHA-approved lenders to offer affordable interest rates, accept lower down payments, and approve borrowers who wouldn’t qualify for a conventional mortgage.

FHA loans can be used to purchase apartment properties, as well as for construction and renovation. These loans can be fixed-rate, which can be beneficial for investors who want to lock in their mortgage costs. HUD loans also have fewer strict requirements than conventional loans, and they don’t require PMI if you make a minimum down payment of 20%.

If you’re interested in a HUD loan, be prepared to submit several pieces of documentation including two years of tax returns, pay stubs, proof of employment, and asset statements. Additionally, a HUD-approved financial intermediary must be involved in the transaction. Be aware that the process can take between eight months to a year to close, and there are some costs associated with it.