5–25 Unit Commercial Multifamily DSCR Underwriting
Bottom Line Up Front (BLUF): Unlike 1–4 unit residential DSCR (which divides gross rent by PITIA), 5+ unit commercial multifamily DSCR is underwritten on Net Operating Income (NOI): Gross Potential Rent minus a 5%–10% vacancy factor and operating expenses divided by annual debt service.
Underwriting Formula / Rule
Commercial DSCR = Annual Net Operating Income (NOI) ÷ Annual Debt Service (P&I).
Wholesale Shelf Benchmark
1.20x–1.25x NOI DSCR up to 75% LTV across commercial wholesale shelves.
Frequently Asked Underwriting Questions
What appraisal report is used for 5+ unit properties?
A narrative commercial MAI appraisal or Form 71B (for 5–8 unit residential-hybrid shelves).
Arranged by Loan Daddy LLC (NMLS #2827624 · (480) 485-1229 · quotes@loandaddy.ai). Business-purpose investment properties only.