Can I use a DSCR on a Quadplex?

Question

Good morning,

I am considering purchasing a quadplex that is in Commercial zoning. I am curious if I can use a DSCR loan on such a small apartment building? I know the cost associated with a DSCR is much higher than with a Conventional loan but the commercial zoning may be problematic for Conventional. I would appreciate any advice as this would be my first quadplex purchase.

Brandon Croucier · Answer

If it's a 1-4 unit, you will get good pricing using a DSCR loan!

Erik Estrada · Answer

Hi Kristie,

Are all 4 units residential? As others stated, if the existing structure is legal but non-confirming that should not be an issue. But, if any of the units are used as commercial space, you may need to structure the loan on a Mixed-Use DSCR loan which could affect pricing.

Alex Bekeza · Answer

@Kristie McCleary You may be surprised.  Right now, Dec 2024, on an investment property 4 unit there are some DSCR lenders with rates better than Fannie/Freddie.  Commercial zoning would be okay as long as the property is considered LEGAL but non conforming.  Sometimes this happens as zoning changes over time but the residential use remains legal. Some lenders may also want to see law and ordinance coverage in your insurance and perhaps a rebuild letter from the city stating that the property could be rebuilt as a residential 4plex if destroyed.

Can I use a DSCR on a Quadplex?

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