A multifamily loan is a commercial real estate loan used to finance apartment buildings and multi-unit residential properties with 5 or more units. The defining characteristic is how it qualifies: unlike a residential mortgage, a multifamily loan is underwritten based on the property's Net Operating Income (NOI), Debt Service Coverage Ratio (DSCR), and capitalization rate — not the borrower's personal income, W-2s, or tax returns.
This is a fundamentally important distinction. Your personal income doesn't matter. What matters is whether the apartment building's rent roll covers the mortgage payment. Hawk Funding Group places multifamily loans from $500,000 to $50M+ with up to 85% LTV, 40-year amortization, non-recourse debt options, and no tax returns required across most states.

Net Operating Income (NOI) is the single most important metric in multifamily lending. It represents what a property earns annually after all operating expenses — but before debt service.

NOI Formula: Gross Rental Income − Vacancy & Credit Loss − Operating Expenses = NOI

Operating expenses include property taxes, insurance, property management fees, maintenance and repairs, utilities (if owner-paid), and capital reserves. They do not include mortgage payments — that's by design. NOI measures the property's standalone income generation ability before financing.

Lenders use NOI to calculate two critical metrics: (1) DSCR = NOI ÷ Annual Debt Service — determines if the property can support the loan payment. (2) Cap Rate = NOI ÷ Property Value — determines the investment's return relative to its cost. Both metrics flow directly from NOI, which is why accurate underwriting of expenses is the foundation of every multifamily loan analysis.

DSCR (Debt Service Coverage Ratio) for a multifamily loan is calculated as: DSCR = Annual NOI ÷ Annual Debt Service (total principal + interest payments per year).
Example: A 20-unit apartment building generates $180,000/year in NOI. The requested loan has $150,000 in annual debt service. DSCR = $180,000 ÷ $150,000 = 1.20x. This means the property earns 20% more than it costs to service — a healthy margin that most lenders readily approve.
DSCR thresholds by lender type:
The preferred threshold is 1.25x minimum — meaning the property must generate 25% more income than its debt service.
The minimum threshold is 1.0x — break-even is acceptable. Note the rate impact of operating at 1.0x vs. 1.20x+ — lenders price risk, and a deal at 1.0x DSCR will carry a modestly higher rate than a 1.25x DSCR deal

Cap rate (capitalization rate) = NOI ÷ Property Value. It represents the property's unlevered return as a percentage of its purchase price or appraised value.

Multifamily lenders don't typically set a minimum cap rate requirement directly — they require the NOI to produce a minimum DSCR at the requested loan amount. However, cap rates matter because they determine how much NOI the property generates relative to its value, which in turn determines maximum loan sizing.

Cap rate expectations by market as of 2026:

Gateway markets (NYC, LA, Miami, San Francisco): 4–5% cap rates are accepted by lenders due to strong appreciation expectations.
Secondary markets (Austin, Nashville, Phoenix, Charlotte): 5–7% cap rates are typical.
Tertiary and rural markets: 7–9%+ required to support financing, given lower liquidity and appreciation prospects.

Hawk's team analyzes your property's NOI, cap rate, and local market to calculate the maximum loan amount before approaching any lender — so you know exactly where you stand before you get into the process.

A non-recourse multifamily loan limits the lender's recovery to the collateral property in the event of default. If the property is foreclosed and sold for less than the outstanding loan balance, the lender cannot pursue the borrower's personal assets — no judgments against bank accounts, other real estate, or investments. The borrower walks away with no further obligation. This is the preferred structure for sophisticated investors who hold properties in LLCs for liability protection. Bad Boy Carve-Outs: Non-recourse loans include carved-out exceptions that reimpose personal liability in specific bad-faith scenarios: fraud or material misrepresentation in the loan application; misappropriation of rental income or insurance proceeds; intentional physical destruction of the property; environmental violations; and filing for bankruptcy without lender consent. These carve-outs protect lenders from borrowers acting in bad faith — they do not apply to simple economic default where the market moved against the investment.

40-year amortization means the mortgage payment is calculated as if the loan will be repaid over 40 years rather than the standard 25 or 30 years. The result is a lower monthly debt service payment — which directly improves cash flow on every unit in the building.
Real-world cash flow impact example:
A $4M multifamily loan at 7.25% interest:
— 30-year amortization: $27,293/month
— 40-year amortization: $25,001/month
— Monthly cash flow improvement: $2,292/month ($27,504/year)
For a 30-unit building, that's roughly $917 per year per unit in additional NOI — which
also increases the property's value based on the market cap rate.
For example, at a 6% cap rate, $27,504/year in additional NOI adds approximately
$458,400 to the property's market value ($27,504 ÷ 0.06).

A value-add multifamily bridge loan is a short-term, interest-only loan used to finance the acquisition and renovation of an apartment building that doesn't yet qualify for permanent financing. "Doesn't yet qualify" typically means the property has high vacancy, deferred maintenance, below-market rents, or is mid-renovation — all conditions that prevent permanent lenders from underwriting to stabilized NOI.

The bridge loan funds the purchase and the renovation. Once the property reaches stabilization — defined by the lender's criteria, typically 85–90% occupancy for 90+ days at market rents — Hawk transitions it to a permanent multifamily loan at the full program terms: 40-year amortization, 80–85% LTV, and non-recourse structure.

Multifamily bridge loans are typically structured as: interest-only payments during the bridge period, 12–36 month term, 75–80% of total cost (purchase + renovation), sourced from private lenders and debt funds. This is the standard capital structure for value-add apartment investment — buy broken, fix it, refinance into permanent money at a higher NOI and lower cap rate.

Yes — and this is one of the most important advantages of commercial multifamily financing over residential investment loans. Hawk Funding Group's multifamily programs require no personal tax returns.

Multifamily loans are underwritten based on the property's income — its actual rent roll, vacancy history, and operating expenses — not the borrower's personal income. Your personal tax returns, W-2s, and debt-to-income ratio are not part of the analysis. What matters is whether the apartment building's NOI supports the loan payment.

This is critical for: self-employed investors whose personal returns show low income after depreciation and deductions; business owners with complex pass-through structures; investors with large portfolios whose personal DTI would disqualify them from residential programs; and international investors with no U.S. tax filings. The property qualifies itself — you just need to demonstrate you're a capable operator.

An assumable multifamily loan can be transferred to a new buyer when the property is sold. The buyer takes over the existing loan — including its interest rate, remaining balance, and repayment terms — rather than obtaining new financing at current market rates.
Why this is powerful: When interest rates rise, assumable loans become extraordinarily valuable. If you originated a $5M multifamily loan at 6.25% and market rates have moved to 8.5%, your buyer can assume your 6.25% loan. At $5M, that's approximately $11,700/month less in debt service — money that flows directly to the buyer's cash return. Properties with below-market assumable debt typically command significantly higher sale prices because buyers are essentially purchasing a below-market financing package along with the real estate.
Assumable loans are a standard feature of agency-backed (Fannie Mae, Freddie Mac) multifamily loans and are available through select lenders in Hawk's network.

Most multifamily loan programs require a minimum personal credit score of 680. Traditional banks and agency lenders typically require 700 or higher. Hawk Funding Group starts at 680, with exceptions available for strong borrowers below this threshold when property performance — DSCR, market, and sponsor experience — provides sufficient compensating factors.

It's important to understand that in multifamily underwriting, credit score is a secondary factor. The primary factors are the property's DSCR, NOI stability, location and market quality, and the borrower's real estate experience and financial reserves. A 665 credit score borrower with a strong 1.20x DSCR property in a growing market and 10 years of multifamily experience will often qualify through our network when a conventional bank would decline based on credit alone.