Quick answer: A building with five or more units falls outside Fannie Mae's single-family Selling Guide, which covers one to four units, and is underwritten by the lender as an improved property loan. The two agency small loan term sheets that state figures require a minimum debt service coverage ratio of 1.25x and allow a maximum loan to value of 75 to 80 percent, and in the hypothetical example below the coverage test, not the LTV test, limits the loan to about 70.5 percent of the price. Florida preempts local tenant regulation to the state, requires deposits to be held in a separate account at a Florida financial institution or backed by a surety bond, and caps non-school assessment increases on nonhomestead property at 10 percent a year, with a reset to just value on the January 1 after a sale. Census median gross rents for the four counties run from $1,357 to $1,585, using 2020 to 2024 five-year estimates.
Investors who move up from a fourplex to a building with five or more units often expect the same process with a bigger number. It is a different process: the loan comes from different lenders under different rules, the insurance market changes, and some tenant law provisions turn on how many units you rent. One thing does not change: a sale resets the assessed value, as it does for any non-homestead rental. This article covers those differences for St. Lucie, Martin, Indian River and Brevard counties, works a hypothetical loan example, and says where I could not find a source.
Where the line falls: four units or fewer, five or more
Fannie Mae's Selling Guide (B2-3-01, dated September 3, 2025) covers first-lien mortgages on residential properties when the dwelling consists of one to four units. Five or more units is outside that guide. On the bank side, the Interagency Guidelines for Real Estate Lending (12 CFR 208, Appendix C) define an improved property loan to include residential property with five or more dwelling units, and also one to four family property that is not owner-occupied. The guidelines set a supervisory loan-to-value limit of 85 percent for improved property and require lenders to set minimum standards for net worth, cash flow and debt service coverage, but set no numeric coverage ratio.
The agency and FHA programs for small apartment loans
Terms on these sheets change without notice, so treat them as a starting point, not a quote. The Freddie Mac and Fannie Mae programs are non-recourse with standard carve-out provisions, meaning the lender's remedy on default is generally the property rather than the borrower's other assets; ask the lender what the carve-outs cover.
| Program | Size and units | Maximum LTV, minimum DSCR, term |
|---|---|---|
| Freddie Mac Optigo Small Balance Loans (lender page, undated) | $1 million to $7.5 million; five or more units | Not stated on the lender page |
| Freddie Mac Conventional Small (term sheet dated 4/26) | Generally $2 million to $10 million; predominantly market-rate properties of 5 to 50 units | 75 percent on 5-year terms, 80 percent on 7 years and longer; 1.25x; 5, 7, 10, 12 or 15 year terms with amortization up to 30 years |
| Fannie Mae Small Mortgage Loan (term sheet, copyright 2026, otherwise undated) | Up to $9 million; 5 or more units; existing, stabilized property | 80 percent; 1.25x; 5 to 30 year terms with amortization up to 30 years |
| HUD/FHA Section 207/223(f) (HUD program page, undated) | At least 5 units with complete kitchens and baths; completed or substantially rehabilitated at least 3 years before application | 83.3 percent of post-repair value for market-rate projects, higher for affordable and assisted projects; no DSCR stated; term may not exceed 35 years or 75 percent of the estimated life of the physical improvements |
The debt service coverage ratio, or DSCR, is net operating income divided by annual loan payments, so 1.25x means the building must earn $1.25 for every $1.00 of debt service.
DSCR and LTV: a hypothetical 8 unit example
A lender runs both tests, loan to value (LTV, the loan as a share of price) and DSCR, and the lower loan wins. The hypothetical below assumes an 8 unit building at a $1,200,000 price, rent of $1,600 per unit per month, a 5 percent vacancy allowance, operating expenses at 45 percent of effective gross income, the Fannie Mae terms above (80 percent maximum LTV, 1.25x minimum DSCR, 30-year amortization), and a 6.5 percent interest rate. The rate and the expense ratio are assumptions, not quotes.
| Line | Amount | Arithmetic |
|---|---|---|
| Gross potential rent | $153,600 | 8 x $1,600 x 12 |
| Vacancy allowance, 5 percent | $7,680 | 0.05 x $153,600 |
| Effective gross income | $145,920 | $153,600 minus $7,680 |
| Operating expenses, 45 percent | $65,664 | 0.45 x $145,920 |
| Net operating income (NOI) | $80,256 | $145,920 minus $65,664 |
| Maximum loan by the LTV test | $960,000 | 0.80 x $1,200,000 |
| Monthly payment on $960,000 at 6.5 percent, 360 months | $6,067.85 | Monthly rate 0.065 / 12 = 0.0054167; 1.0054167 to the 360th power = 6.992; $960,000 x 0.0054167 / (1 minus 1/6.992) = $5,200 / 0.85698 |
| Annual debt service at the LTV maximum | $72,814 | $6,067.85 x 12 |
| DSCR at the LTV maximum | 1.10x | $80,256 / $72,814 |
| Debt service the income allows at 1.25x | $64,205 a year, $5,350 a month | $80,256 / 1.25, then / 12 |
| Loan the DSCR test supports | About $846,500 | $5,350.40 x 0.85698 / 0.0054167 |
| Resulting loan to value | 70.5 percent | $846,500 / $1,200,000 |
| Equity before closing costs | About $353,500 | $1,200,000 minus $846,500 |
The program allows 80 percent, but the income supports about 70.5 percent, so the buyer's equity rises from $240,000 to about $353,500 before closing costs. A higher rate lowers the loan; lower expenses raise it. That is why I ask for the seller's trailing operating statements and rent roll before I help a buyer model an offer.
Florida landlord and tenant law: deposits, notices and preemption
Section 83.425 of the Florida Residential Landlord and Tenant Act, added by chapter 2023-314, preempts the regulation of residential tenancies to the state and supersedes local regulations on matters the act covers.
Under s. 83.49, a landlord holds deposits in a separate non-interest-bearing account at a Florida financial institution with no commingling, or in an interest-bearing account at a Florida financial institution that pays the tenant, at the landlord's election, at least 75 percent of the annualized average interest rate or 5 percent simple interest, or backed by a surety bond. Written notice of where the deposit is held is due within 30 days of receipt; that requirement exempts landlords renting fewer than five units, so it applies to every building here. At move-out the landlord returns the deposit within 15 days if there is no claim, or sends a written claim within 30 days, and the tenant has 15 days to object. On a sale, s. 83.49(7) transfers the deposits to the new owner with an accounting, and the new owner is presumed to have received deposits up to one month's rent. Get the deposit ledger and bank statement before closing.
For a tenancy without a specific term, s. 83.57 (last amended by the same 2023 law) requires not less than 60 days' notice for year to year, 30 days for month to month and quarter to quarter, and 7 days for week to week. The act has separate notice rules for nonpayment, other breaches, fixed-term leases and e-mail delivery; have a Florida real estate attorney walk through those with the leases in hand.
Property tax: no homestead, a 10 percent cap, and a reset at sale
A rental building does not receive a homestead exemption; it gets a cap instead. Section 193.1554 covers residential real property with nine or fewer dwelling units that is not receiving the homestead exemption: for all levies other than school district levies, the assessed value may not rise more than 10 percent over the prior year. The catch for a buyer is subsection (5): after a change of ownership or control (a sale, a foreclosure, a transfer of title, or a cumulative transfer of more than 50 percent of the owning entity), the property is assessed at just value as of the following January 1, and the cap starts over. Buildings with 10 or more units are outside s. 193.1554 and fall under s. 193.1555 instead, with the same 10 percent limit, the same reset at sale, and a further reset when a qualifying improvement raises just value by at least 25 percent. School levies have no cap under either section. As my seller's tax bill post explains, the seller's bill may reflect a capped value, so budget at just value.
Insurance: Citizens, the 20 percent rule, and flood limits
Citizens Property Insurance Corporation writes commercial residential policies, multiperil and wind-only with no liability coverage, for apartment buildings whose owners cannot find coverage in the private market and meet Citizens' underwriting criteria. One eligibility test is in s. 627.351(6)(c)5.c.: a commercial lines residential risk is not eligible for a Citizens policy unless the premium from an authorized private insurer is more than 20 percent greater than the premium for comparable coverage from Citizens, and the same test applies at renewal.
Flood is a separate policy with its own ceiling. FEMA's Risk Rating 2.0 guide for other residential buildings (November 2022) lists the National Flood Insurance Program maximum for that class at $500,000 for the building and $100,000 for contents; an FDIC letter (FIL-28-2014) describes the class as non-condominium residential buildings designed for five or more families. On a $1,200,000 building that leaves a gap, so ask a licensed insurance agent about excess flood coverage and ask the lender what it will require.
What the county rent figures say
The most current rent figures I can cite for all four counties are Census QuickFacts five-year estimates for 2020 through 2024. They are a check on a seller's pro forma, not an asking rent for a specific building.
| County | Median gross rent (ACS 2020 to 2024) |
|---|---|
| St. Lucie | $1,585 |
| Martin | $1,569 |
| Indian River | $1,357 |
| Brevard | $1,556 |
What I could not confirm
I did not find a 2025 or 2026 apartment vacancy or rent statistic for any of the four counties. I did not locate a current Freddie Mac Small Balance Loan term sheet with coverage and loan-to-value figures, so the table shows only that program's size range. I did not find Citizens' commercial residential coverage caps, or which local ordinances the 2023 preemption law superseded here. Confirm with a multifamily lender, a Florida real estate attorney, the county property appraiser and a licensed insurance agent.
The practical takeaway
A five plus unit purchase is sized by the building's income, taxed from a reset value, insured under commercial rules, and operated under a statewide tenant act. Model the loan from the rent roll and operating statements, budget taxes at just value, get the deposit accounting before closing, and have insurance quoted before you go under contract.
Questions buyers ask about small apartment buildings
Why is a 5 unit building financed differently from a 4 unit one?
Fannie Mae's single-family Selling Guide (B2-3-01, September 3, 2025) covers dwellings of one to four units. Five or more units go to multifamily programs such as Freddie Mac Small Balance Loans ($1 million to $7.5 million, five or more units) or Fannie Mae Small Mortgage Loans (up to $9 million, 5 or more units), or to a bank loan underwritten as improved property.
What DSCR and LTV do the agency small loan programs require?
Fannie Mae's Small Mortgage Loan term sheet lists an 80 percent maximum LTV and a 1.25x minimum DSCR. Freddie Mac's Conventional Small term sheet (4/26) lists 1.25x and 75 to 80 percent depending on the term. The bank supervisory LTV limit for improved property is 85 percent under 12 CFR 208, Appendix C, which sets no numeric DSCR.
Can a city or county on the Treasure Coast or Space Coast add its own tenant rules?
No. Section 83.425, added by chapter 2023-314, preempts regulation of residential tenancies to the state and supersedes local government regulations on matters covered by the Residential Landlord and Tenant Act.
How long does a landlord have to return a security deposit in Florida?
Under s. 83.49(3), the landlord returns the deposit within 15 days after the tenancy ends if there is no claim, or sends a written claim notice within 30 days. The tenant then has 15 days to object.
Does the 10 percent assessment cap carry over to the buyer?
No. Under s. 193.1554(5) for buildings of nine or fewer units, and s. 193.1555(5) for larger buildings, a change of ownership or control resets the assessment to just value as of the following January 1. The 10 percent cap on non-school levies then starts again from that value.
How much NFIP flood coverage can a five plus unit building carry?
FEMA's Risk Rating 2.0 guide for other residential buildings (November 2022) lists a maximum of $500,000 for the building and $100,000 for contents. Ask a licensed insurance agent about excess flood coverage above those limits.
Talk with William. Looking at a building with five or more units? Send me the address and the rent roll. I will help you assemble the operating figures, the deposit accounting and the questions for your lender, attorney, CPA and insurance agent before you write an offer. Call or text (772) 800-2274 or send a message.
General information, not legal, tax, lending, insurance, survey, environmental or engineering advice. Agency program terms, interest rates, Citizens eligibility rules and assessed values change; the loan example uses an assumed rate and an assumed expense ratio, the Census rents are 2020 to 2024 five-year estimates, and no 2025 or 2026 county apartment vacancy or rent statistic was confirmed. Confirm with a multifamily lender, a Florida real estate attorney, a CPA, a licensed insurance agent and the county property appraiser. Statute and rule references are as reviewed on October 22, 2026. William Merchant, REALTOR®, RE/MAX Gold. Each RE/MAX office is independently owned and operated. Equal Housing Opportunity.
Sources
- Fannie Mae Selling Guide B2-3-01, General Property Eligibility (September 3, 2025)
- 12 CFR 208, Appendix C, Interagency Guidelines for Real Estate Lending Policies (eCFR current as of October 16, 2026)
- Freddie Mac Multifamily: Optigo Small Balance Loan lenders (undated)
- Freddie Mac Multifamily: Conventional Small term sheet (4/26)
- Fannie Mae Multifamily: Small Mortgage Loan Program term sheet (copyright 2026)
- HUD: Multifamily programs, Section 207/223(f) (undated)
- Florida Statutes 83.425, Preemption (2025)
- Florida Statutes 83.49, Deposit money or advance rent (2025)
- Florida Statutes 83.57, Termination of tenancy without specific term (2025)
- Florida Statutes 193.1554, Assessment of nonhomestead residential property (2025)
- Florida Statutes 193.1555, Assessment of certain residential and nonresidential real property (2025)
- Citizens Property Insurance Corporation: Commercial policies (undated, copyright 2026)
- Florida Statutes 627.351, subsection (6)(c)5.c., the Citizens 20 percent rule (2025)
- FEMA: NFIP Risk Rating 2.0 simple guide for other residential buildings (November 2022)
- FDIC FIL-28-2014, NFIP coverage limits for other residential buildings (2014)
- U.S. Census Bureau QuickFacts: St. Lucie County, Florida (ACS 2020 to 2024 five-year estimates)
- U.S. Census Bureau QuickFacts: Martin County, Florida (ACS 2020 to 2024 five-year estimates)
- U.S. Census Bureau QuickFacts: Indian River County, Florida (ACS 2020 to 2024 five-year estimates)
- U.S. Census Bureau QuickFacts: Brevard County, Florida (ACS 2020 to 2024 five-year estimates)
