Plan on roughly 20%–25% down for a 2–4 unit and 25%–30% for a 5+ unit commercial building — with the exact number driven as much by how the building cash-flows as by a fixed percentage. On top of the down payment for an apartment building, a commercial lender will want to see reserves. Here’s how the cash-to-close really comes together.
Down payment by apartment building size
- 2–4 units (residential): commonly 20%–25% down.
- 5+ units (commercial multifamily): commonly 25%–30% down, sometimes more.
Those are starting points, not hard rules. A building with strong, clean NOI can land at the lower end; a thinner-cash-flowing property may need more down to bring the loan into line.
The down payment is also a lever
Here’s the part investors miss: on an income-based loan, the down payment isn’t just an entry cost — it’s a tool. A larger down payment means a smaller loan, a smaller payment, and a higher DSCR. If a building’s income is borderline, putting more down is often the cleanest way to make the deal pencil. You’re not just buying in; you’re tuning the loan. That is why it pays to plan the down payment for an apartment building early.
Reserves: the other cash requirement
Beyond the down payment, commercial lenders want reserves — money left in the bank after closing to cover the mortgage if income dips. Expect something in the range of several months of the debt payment (often six months or more on commercial deals). Larger or older buildings can draw more scrutiny here. Reserves have to be documented, real, and yours.
Don’t forget closing costs and escrows
Cash to close also includes closing costs, and on some commercial deals a repair or capital-expenditure escrow — money set aside for known work the building needs. The CFPB publishes plain-language guides to closing costs and escrows. Budget for these early so the total cash requirement doesn’t surprise you late in the deal.
Buying from outside the U.S.?
Foreign national investors can absolutely finance apartment buildings — typically with a bit more down (often 30%+) and documented reserves. The building still qualifies on its own income; the larger down payment is the trade for a thinner U.S. profile.
A typical deal
A scenario I see often: an investor buying a 6-unit that cash-flows well. We start at 25% down, confirm the NOI clears the DSCR, and set aside several months of reserves. Because the numbers were solid, the down payment stayed at the low end of the range — and the reserves, not the down payment, were the piece we planned around.
Ready to size your cash to close?
The real number comes from the building’s income, not a rule of thumb. Tell us about your deal and we’ll map the full cash requirement — in English or Spanish.
By Andres Jara — Alpha Equity Lending (NMLS #1855083). 20+ years in real estate finance, an MS in Finance, and an active South Florida investor and landlord.
