Multifamily down payments start at 15% to 25% for conventional loans, but the exact amount depends on the loan type, your credit, and the property size

A multifamily property is any building with two to four units (sometimes called a small multifamily) or five or more units (commercial multifamily). The down payment you need is not the same as for a single-family home. Lenders treat a fourplex differently from a duplex, and both differently from a 50-unit apartment building. The percentage you put down affects your interest rate, your monthly payment, and whether you can close the deal at all.

Conventional loans—the most common route for investors buying multifamily properties—typically require 15% down for a two- to four-unit building and 20% to 25% down for five or more units. FHA loans can go as low as 3.5% down if you are owner-occupying a two- to four-unit property, but that option closes off if you are buying as an investment. Portfolio lenders and private money sources may have different thresholds entirely, sometimes accepting 10% down or requiring 30% or more depending on the property condition and your financial profile.

Key Takeaways

  • Conventional loans for two- to four-unit properties typically require 15% down; five or more units usually require 20% to 25% down.
  • FHA loans allow 3.5% down on owner-occupied two- to four-unit buildings but not on investment properties.
  • Your credit score, debt-to-income ratio, and the property's condition all affect whether a lender will accept the minimum down payment or require more.
  • Portfolio lenders and private lenders may accept lower down payments (10%) or require higher ones (30%+) based on their own underwriting rules.
  • Down payment size directly affects your interest rate, monthly payment, and whether you need mortgage insurance.

Conventional loans and the two- to four-unit threshold

A duplex, triplex, or fourplex falls into a middle category that lenders treat more favorably than a large apartment complex but with stricter rules than a single-family home. Most conventional lenders will finance these properties with 15% down if you have a credit score of 680 or higher and a debt-to-income ratio below 50%. Some lenders will go as low as 10% down if you have excellent credit (740+) and strong cash reserves, but 15% is the standard floor.

The reason lenders separate two- to four-unit properties from larger multifamily is that you can live in one of the units yourself. If you do, the property is considered owner-occupied, and lenders view it as lower risk than a pure investment. If you do not live there, the property is investment property, and lenders typically require 20% to 25% down instead. The difference matters: a 15% down payment on a $400,000 fourplex is $60,000; a 25% down payment is $100,000.

Five-or-more-unit buildings and commercial multifamily loans

Once a property has five or more units, conventional lenders treat it as commercial real estate, not residential. The down payment floor rises to 20% for most lenders, and 25% is common. A few lenders will go to 15% if you have strong financials and the property has a solid income history, but you should expect to put down at least 20%.

Commercial multifamily loans also have stricter income requirements. Lenders want to see that the rental income from the building covers the mortgage payment, property taxes, insurance, and maintenance—usually by a margin of 1.25 to 1.35 times the debt payment. This is called the debt-service coverage ratio (DSCR). A property that barely breaks even on cash flow will not may have access to, no matter how much you put down. If the building does not generate enough income, some lenders will let you use your personal income to bridge the gap, but that requires a lower debt-to-income ratio on your end.

FHA loans for owner-occupied two- to four-unit properties

The Federal Housing Administration insures loans as low as 3.5% down on owner-occupied multifamily properties with two to four units. This is the lowest down payment option available for multifamily, but it comes with strict conditions. You must live in one of the units as your primary residence. You cannot use an FHA loan to buy a fourplex as an investment property. Your credit score must be at least 580 (though 640+ is more realistic for approval), and you will pay mortgage insurance for the life of the loan, which adds roughly 0.5% to 1% to your annual interest rate.

FHA loans also have lower borrowing limits than conventional loans, and the limits vary by county. In high-cost areas, the limit for a four-unit property can be $1.2 million or higher; in lower-cost areas, it may be $500,000 or less. Check your county's FHA loan limit before assuming this route will work for the property you want to buy.

Portfolio lenders and private money sources

Portfolio lenders are banks or credit unions that keep loans on their own books rather than selling them to Fannie Mae or Freddie Mac. Because they hold the risk themselves, they can set their own rules. Some portfolio lenders will finance multifamily properties with as little as 10% down if you have a strong relationship with the bank, excellent credit, and significant cash reserves. Others require 30% down or more, especially for properties that need renovation or have weak rental income.

Private lenders—individuals or companies lending their own capital—operate outside the conventional system entirely. Down payments can range from 5% to 50% depending on the lender's appetite for risk, the property's condition, and your track record as an investor. Private loans typically come with higher interest rates (8% to 15% or more) and shorter terms (three to five years), but they move faster and have fewer documentation requirements than bank loans. Use private money as a bridge to refinance into a conventional loan later, not as a permanent financing solution.

How down payment size affects your costs

The down payment you choose directly changes what you pay each month and over the life of the loan. A smaller down payment means a larger loan amount, which means higher monthly payments and more interest paid overall. It also affects your interest rate: lenders charge higher rates for loans with smaller down payments because the risk is higher. A 15% down conventional loan might carry a 6.5% rate, while a 25% down loan on the same property might be 6.0%.

Loans with less than 20% down on investment properties typically require mortgage insurance (called PMI on conventional loans). This insurance protects the lender if you default, and you pay the premium as part of your monthly payment. PMI on a multifamily property can add $200 to $500 per month depending on the loan size and down payment percentage. Once you have paid down the principal to 80% of the original purchase price, you can request to remove PMI, but that takes years.

Putting down more than the minimum

Putting down more than the minimum down payment can make sense if you have the cash and want to lower your monthly payment or interest rate. A 30% or 40% down payment signals strength to lenders and can unlock better terms. It also reduces your leverage—the amount you are borrowing relative to what you own—which means less risk if the property's value drops or rental income declines.

However, putting down more cash means less capital available for repairs, vacancies, or other investments. Many experienced multifamily investors prefer to put down the minimum (15% to 20%) and keep cash in reserve for unexpected costs. The math depends on your situation: if you have unlimited capital and want to minimize risk, put down more; if you are managing tight cash flow or want to own multiple properties, the minimum down payment may be the better choice.

Frequently Asked Questions

Can I put down less than 15% on a multifamily property?

Conventional lenders rarely go below 15% for two- to four-unit owner-occupied properties. FHA loans allow 3.5% down if you live in one unit, but not for investment properties. Portfolio and private lenders may accept 10% down depending on your credit and cash reserves, but expect higher interest rates and possibly mortgage insurance.

Does the down payment change if the property needs repairs?

Yes. A property in poor condition or with deferred maintenance may require a larger down payment—sometimes 25% to 30%—because lenders see it as higher risk. Some lenders will not finance a property below a certain condition threshold at any down payment level. You may need to use a renovation loan or private money for distressed properties.

What if I do not have the full down payment saved yet?

You can explore owner financing (the seller acts as the lender), private money, or a partnership with another investor to cover the down payment. Some lenders also allow you to use a gift from a family member for part of the down payment, though they typically require a letter stating the money is a gift, not a loan you must repay.

Do I need a larger down payment if my credit score is lower?

Yes. Lenders with credit scores below 680 often face higher down payment requirements—sometimes 20% to 25% even on owner-occupied two- to four-unit properties. Improving your credit score before applying can lower the down payment you need and reduce your interest rate.

How does down payment affect my ability to refinance later?

A smaller down payment means you start with more debt relative to the property's value. If the property's value drops or rental income declines, you may not have enough equity to refinance. A larger down payment gives you more cushion and makes refinancing easier if rates drop or you need cash out later.