Houston Multifamily Loans: Apartment & Multi-Unit Financing [2026 Guide]

Why Is Houston One of the Best Markets for Multifamily Investment in 2026?

Houston remains one of the most compelling multifamily investment markets in the country, and the numbers back it up. Metro Houston added nearly 200,000 residents in 2024 alone, bringing its population to 7.8 million. That equals roughly one new resident every 2.7 minutes. Houston has led the nation in municipal population growth during the 2020s, adding 91,180 new residents in just four years.

For multifamily investors, this population surge translates directly into sustained rental demand. Whether you are looking at a 10-unit walk-up in Montrose or a 200-unit garden-style complex in Katy, securing the right financing is the difference between a good deal and a great one. Houston multifamily loans are available through a wide range of programs, from agency loans backed by Fannie Mae and Freddie Mac to bridge financing, DSCR loans, and HUD/FHA products.

The local economy is diversifying beyond its traditional energy base. The Texas Medical Center, the world's largest medical complex, is developing Helix Park, a 37-acre research campus with five million square feet of collaborative space. Eli Lilly is investing $6.5 billion in a manufacturing facility at Generation Park in northeast Houston. Health care and social assistance alone are projected to add 14,000 new positions in 2026, and the Greater Houston Partnership forecasts 30,900 total new jobs across the metro.

This combination of population growth, job creation, and a declining construction pipeline makes 2026 a strategic window for multifamily acquisitions in Houston.

What Are the Current Houston Multifamily Loan Rates?

Multifamily loan rates in Houston vary by product type, property class, and borrower profile. As of early 2026, here is a snapshot of where rates stand across the major loan programs available to Houston apartment investors.

HUD/FHA 223(f) loans currently offer the most competitive rates, starting around 5.64% with terms up to 35 years and leverage up to 85% LTV. These loans are ideal for stabilized properties with strong occupancy, though the application process takes longer than conventional options.

Conventional agency loans through Fannie Mae and Freddie Mac are pricing in the 5.75% to 6.50% range for 5 to 10-year fixed terms. These programs work well for properties with 5 or more units and offer non-recourse options for qualifying borrowers.

For investors who need speed or are targeting value-add properties, bridge loans offer 12 to 36-month terms with rates typically between 7.00% and 9.50%. Bridge financing is particularly relevant in Houston right now, where elevated vacancy rates in certain submarkets create opportunities to acquire, renovate, and re-stabilize apartment communities.

DSCR loans are another popular option for Houston multifamily investors. These loans qualify based on the property's debt service coverage ratio rather than the borrower's personal income. You can calculate your property's DSCR here to see if you meet minimum thresholds, which typically range from 1.20x to 1.25x.

How Is the Houston Apartment Market Performing Right Now?

The Houston multifamily market is in a transitional phase, and understanding the current dynamics is critical for making informed financing decisions. After several years of aggressive construction, the supply wave is finally cresting.

Vacancy reached a record-high 12.4% in Q4 2025, driven by over 62,000 units delivered since 2023. However, a meaningful shift is underway. For the first time in four years, absorption outpaced new deliveries in the first half of 2025, driving a 50-basis-point drop in the overall vacancy rate. By mid-2025, occupancy had ticked up from 88.3% to 89.0%.

Rent growth remains soft but is stabilizing. Asking rents average approximately $1,276 per month across the metro, which is roughly 23% below the national average. This affordability advantage is one reason Houston continues to attract domestic migration from higher-cost markets like California and the Northeast.

The construction pipeline is shrinking rapidly. Only 9,321 units were under construction as of mid-2025, less than half the 18,775 underway a year earlier. Analysts project just 3,500 new units will deliver in 2026, well below historical norms. This supply contraction is expected to support rent stabilization in late 2026 and modest rent growth of 3.5% to 5.0% by early 2027.

Class A product continues to outperform, accounting for 79.4% of overall absorption in Q2 2025 and representing the only segment achieving positive quarter-over-quarter rent growth. For investors considering new construction or recently delivered properties, this is an encouraging signal.

Which Houston Submarkets Offer the Best Multifamily Investment Opportunities?

Houston's 33 submarkets each present distinct investment profiles. Your choice of submarket directly affects your loan terms, because lenders evaluate location risk alongside property fundamentals. Here is how some of Houston's most active multifamily submarkets compare.

Midtown and Montrose represent Houston's urban core for multifamily investment. Midtown benefits from METRORail connectivity, providing direct access to Downtown offices, the Texas Medical Center, and NRG Park. Montrose offers a mix of historic fourplexes and contemporary mid-rise apartments. Cap rates in these urban neighborhoods range from 4.9% to 5.3% for stabilized Class A assets, reflecting strong tenant demand and walkability premiums.

The Heights continues to command premium rents due to its neighborhood character, dining scene, and proximity to Downtown. Smaller multifamily properties (5 to 20 units) in the Heights often attract local investors seeking value-add opportunities through renovation and unit upgrades.

The Medical Center and surrounding areas benefit from the Texas Medical Center's 106,000-employee workforce. With 30,000 additional jobs projected from ongoing expansion, rental demand near the Medical Center remains structurally supported. Properties within a short commute of this employment hub are viewed favorably by lenders.

Energy Corridor has seen renewed interest as energy sector employment stabilizes and new developments like Define Living's Park Row and The Watt luxury high-rise add modern inventory. Cap rates in this submarket range from 5.5% to 6.2%.

Katy and Sugar Land represent Houston's suburban growth story. Katy has grown by more than 20% since 2020, and suburban submarkets offer cap rates of 5.8% to 6.4%. Lenders often view suburban Houston favorably due to strong school districts, family-oriented demographics, and lower per-unit acquisition costs.

The Northwest submarket leads the metro in both construction activity (3,599 units underway in Q2 2025) and absorption (2,586 units absorbed in the same quarter), making it a bellwether for broader market health.

What Types of Multifamily Loans Are Available in Houston?

Houston investors have access to the full spectrum of multifamily financing products. The right choice depends on your property type, investment strategy, and timeline.

Fannie Mae and Freddie Mac Agency Loans are the workhorses of multifamily finance. These programs offer 5 to 30-year terms, fixed and floating rate options, non-recourse structures, and LTVs up to 80%. They work best for stabilized properties with 5 or more units and occupancy above 90%.

HUD/FHA Multifamily Loans (223f for acquisition/refinance, 221d4 for new construction) offer the longest terms and lowest rates in the market. The tradeoff is a longer closing timeline, often 4 to 6 months, and more extensive documentation requirements.

Bridge Loans are essential for Houston's current market, where elevated vacancies create value-add opportunities. A bridge loan provides short-term capital to acquire and renovate a property before refinancing into permanent debt. Interest-only payments during the bridge period help preserve cash flow.

DSCR Loans qualify borrowers based on property cash flow rather than personal income. This is ideal for investors with complex tax returns or multiple properties. Use our DSCR calculator to estimate your coverage ratio before applying.

CMBS Loans offer competitive rates for larger properties ($2 million and above) and are available to a broader range of borrowers. These loans are securitized, which can limit flexibility for early prepayment.

Bank and Credit Union Portfolio Loans from Houston-area lenders often provide more flexible terms and faster closing timelines. Local lenders understand the Houston market and may be more comfortable with properties in transitional submarkets.

How Do Lenders Evaluate a Houston Multifamily Property?

Understanding how lenders underwrite Houston apartment deals helps you prepare a stronger loan application and secure better terms. Here are the primary factors lenders consider.

The first factor is the Debt Service Coverage Ratio (DSCR). Lenders want to see that the property's net operating income comfortably covers debt payments. Most programs require a minimum DSCR of 1.20x to 1.25x. In Houston's current market, where vacancy is elevated, lenders may stress-test your NOI assumptions more aggressively. Use our commercial mortgage calculator to model different scenarios.

The second factor is Loan-to-Value (LTV). Most multifamily programs cap LTV at 75% to 80%, though HUD loans can go up to 85%. In Houston, where average price per unit sits around $148,124, a 75% LTV on a 50-unit property at $150,000 per unit would mean a loan of approximately $5.6 million on a $7.5 million acquisition.

Property condition and age matter significantly. Lenders will order a property condition assessment and may require reserves for deferred maintenance. Older Class B and C properties in Houston, which represent the majority of value-add opportunities, often require renovation budgets that should be factored into your financing plan.

Submarket fundamentals also play a role. Lenders track vacancy trends, rent comparables, and new supply in the immediate area. Properties in submarkets with declining vacancy and limited new construction, like portions of the Inner Loop and established suburban nodes, may receive more favorable underwriting.

Borrower experience is evaluated alongside property metrics. First-time multifamily investors may face higher equity requirements or need to bring on an experienced key principal. Lenders want to see a track record of managing similar assets, particularly in Texas markets.

What Is the Multifamily Loan Application Process in Houston?

The timeline from initial inquiry to closing varies by loan product, but the general process follows a consistent framework. Here is what to expect when applying for a Houston multifamily loan.

Before you begin, gather your property financials (trailing 12-month operating statements, rent roll, T-12 income and expense statements), personal financial statements, entity documents, and a brief business plan or investment summary.

For agency and conventional loans, expect a 45 to 75-day closing timeline. Bridge loans can close faster, often within 21 to 45 days. HUD/FHA loans require the most patience, typically 90 to 180 days from application to closing.

Working with an experienced commercial mortgage broker who knows the Houston market can significantly streamline this process. A broker with established lender relationships can match your property and investment strategy to the right program, negotiate better terms, and keep the process on track.

Ready to get started? Contact our team to discuss your Houston multifamily financing needs.

What Should Houston Multifamily Investors Watch for in 2026?

Several market dynamics will shape both investment opportunities and financing conditions for Houston apartment properties throughout 2026.

Supply relief is coming. With only 3,500 units expected to deliver in 2026 and the active construction pipeline at its smallest since 2017, the supply-demand imbalance that pushed vacancy to record highs is correcting. Investors who acquire during this transitional period and hold through the recovery stand to benefit from improving fundamentals.

Interest rate environment. The Federal Reserve's policy trajectory will continue to influence multifamily borrowing costs. While rates have stabilized in the 5.5% to 7.0% range for most products, any movement lower would compress cap rates and push property values higher. Locking in favorable terms now could prove advantageous.

Energy sector diversification. Houston's economy is less dependent on oil and gas than in previous cycles. Health care, technology, manufacturing (Eli Lilly's $6.5 billion facility), and logistics are all contributing to a broader employment base. This diversification reduces the cyclical risk that has historically concerned lenders in Houston.

Value-add window. With average cap rates at 5.8% and Class B/C properties available at 6.5% to 7.0%+ caps, there is meaningful spread between acquisition yields and stabilized returns. Investors with bridge financing and renovation capital can target properties with below-market rents and physical improvement needs.

Suburban growth momentum. Katy, Fulshear (the fastest-growing U.S. city with 50,000+ residents), Conroe, and the Northwest submarket continue to attract families and employers. Suburban multifamily properties in these corridors benefit from strong school districts, newer infrastructure, and competitive rents.

What Are the Most Common Questions About Houston Multifamily Loans?

What is the minimum loan amount for a Houston multifamily property?

Most commercial multifamily loan programs start at $500,000 to $1,000,000. For smaller properties (5 to 10 units), some lenders offer portfolio loans starting at $250,000. HUD/FHA programs typically require a minimum of $2 million. The right program depends on your property size and total acquisition cost. For Houston properties, where the average price per unit is approximately $148,000, a 20-unit property would require a loan in the $2 million to $2.4 million range at 75% to 80% LTV.

How does Houston's vacancy rate affect my loan approval?

Lenders closely monitor market vacancy when underwriting Houston multifamily loans. With the metro vacancy rate at approximately 11% to 12%, lenders may apply more conservative underwriting assumptions, such as higher vacancy reserves or lower projected rental income. However, the declining construction pipeline and improving absorption trends are positive signals. Properties with in-place occupancy above 90% and strong historical performance will be evaluated more favorably than the broader market statistics might suggest.

Can I get a multifamily loan for a property that needs renovation?

Yes. Bridge loans are specifically designed for value-add multifamily investments. These short-term loans (12 to 36 months) provide acquisition capital plus renovation funds, often held in a reserve account and disbursed as work is completed. In Houston's current market, bridge financing is particularly relevant for acquiring Class B and C properties at attractive cap rates (6.5% to 7.0%+) and renovating them to achieve higher rents and lower vacancy.

What DSCR do I need for a Houston apartment loan?

Most lenders require a minimum debt service coverage ratio of 1.20x to 1.25x for multifamily properties. This means the property's net operating income must be 120% to 125% of the annual debt service payments. Some programs, particularly DSCR-specific loans, may accept ratios as low as 1.0x for strong borrowers and well-located properties. You can calculate your property's DSCR to see where you stand before applying.

Are there special loan programs for first-time multifamily investors in Houston?

While there are no programs exclusively for first-time investors, several options are more accessible to newer borrowers. Fannie Mae's Small Balance Loan program (for loans of $750,000 to $7.5 million) has streamlined documentation requirements. Some local Houston banks offer portfolio loans with more flexible borrower qualification criteria. First-time investors should expect to provide a larger down payment (typically 25% to 30% versus 20% to 25% for experienced borrowers) and may need to demonstrate liquid reserves equal to 6 to 12 months of debt service.

How long does it take to close a multifamily loan in Houston?

Closing timelines depend on the loan product. Bridge loans can close in as little as 21 to 30 days. Conventional bank loans typically take 45 to 60 days. Fannie Mae and Freddie Mac agency loans require 45 to 75 days. HUD/FHA loans have the longest timeline at 90 to 180 days. Working with an experienced broker and having your documentation organized upfront can help expedite the process. Reach out to our team to discuss your timeline and options.