Multifamily Loans in Los Angeles: Apartment Building Financing Guide (2025)

Los Angeles remains one of the most active multifamily investment markets in the United States. With roughly 650,000 rent-stabilized units and tens of thousands of market-rate apartments spread across neighborhoods from Downtown LA to the San Fernando Valley, financing apartment buildings here demands specialized knowledge. Whether you are purchasing a 10-unit building in Koreatown or refinancing a 200-unit complex in Hollywood, this guide covers every loan program, rate benchmark, and regulatory consideration you need to close your next deal.

What Are the Current Multifamily Loan Rates in Los Angeles?

As of early 2026, apartment mortgage rates in Los Angeles range from approximately 4.73% to 12.75%, depending on the loan product, leverage, and borrower profile. Agency loans from Fannie Mae and Freddie Mac remain the most competitive options for stabilized properties, while bridge and construction financing carry higher rates that reflect shorter hold periods and transitional risk.

Key benchmark indices driving these rates include the 5-Year Treasury at 3.61%, the 10-Year Treasury at 4.04%, and the 5-Year Swap at 3.32%. Lenders typically price multifamily loans as a spread above these benchmarks, and LA properties often command tighter spreads than secondary markets because of consistent rental demand and long-term appreciation.

For investors targeting 5+ unit buildings, the sweet spot tends to be agency financing in the 5.46% to 6.26% range for Fannie Mae products, with terms stretching up to 30 years and maximum LTV ratios of 80%. FHA/HUD loans offer the lowest absolute rates, sometimes dipping below 5.00%, but the application process can stretch six months or longer, making them better suited for long-term holders rather than value-add operators.

Which Loan Programs Work Best for LA Apartment Buildings?

The right financing structure depends on your investment strategy, property condition, and timeline. Los Angeles apartment investors generally choose from six primary loan categories, each with distinct advantages.

Agency Loans (Fannie Mae and Freddie Mac) deliver the lowest rates and longest terms for stabilized properties with strong occupancy. These non-recourse loans work well for buildings with 90%+ occupancy and a DSCR of 1.25x or higher. Minimum loan amounts typically start around $1 million to $1.5 million.

FHA/HUD Financing provides the longest amortization periods (35 to 40 years) and highest LTV ratios (up to 83.3% for acquisitions). The trade-off is a lengthy approval process and strict property condition requirements. These loans are ideal for large-scale affordable housing projects or long-hold acquisitions.

CMBS/Conduit Loans offer fixed-rate financing from $2 million and up, with LTV caps around 75%. They are popular for mid-size LA apartment buildings where borrowers want non-recourse terms without the agency paperwork.

Bridge Loans fill the gap for value-add projects, lease-up situations, and acquisitions that need fast closings. Rates range from 5.75% to 12.75% with terms of six months to three years. These interest-only loans let investors renovate units, stabilize occupancy, and then refinance into permanent debt.

DSCR Loans qualify borrowers based on property cash flow rather than personal income, making them popular with investors who own multiple buildings or have complex tax returns. To understand the full qualification process, review our DSCR loan requirements guide.

SBA Loans serve owner-occupants and mixed-use property buyers. If you plan to operate a business from one unit of your apartment building, SBA 504 and 7(a) programs can provide up to 90% financing.

How Does the LA Multifamily Market Look for Investors Right Now?

The Los Angeles multifamily market is navigating a period of rising supply and moderating rent growth, but the long-term fundamentals remain compelling. Here is a snapshot of current conditions.

Average asking rents across LA sit at approximately $2,306 per month, with effective rents around $2,290 after concessions. Annual rent growth has slowed to roughly 1.0%, which is below the city's historical average of 2.4%. This softening reflects a wave of new supply that pushed the metro-wide vacancy rate to 5.7% in Q4 2025, the highest level since early 2021.

However, supply pressure should ease soon. Fewer than 5,200 new units are expected to deliver in 2026, a sharp drop from recent years. As this pipeline thins out, occupancy should begin recovering by mid-2026, which will support stronger rent growth heading into 2027.

Cap rates across LA currently average around 5.0% to 5.6%, with the average price per unit at approximately $368,000 as of Q3 2025. Class A luxury buildings trade at tighter caps (4.0% to 4.5%), while Class C value-add properties in neighborhoods like Westlake and South LA can offer cap rates above 6.0%.

The metro added an estimated 41,000 jobs in 2025, and entertainment, healthcare, and technology sectors continue to drive housing demand. Apartment inventory expanded by 1.2% last year, marking the highest annual supply growth since 2000, but population density and permitting constraints will keep LA a supply-constrained market over the long run.

Which LA Neighborhoods Offer the Best Multifamily Investment Opportunities?

Los Angeles is not a single market. It is a collection of distinct sub-markets, each with different rent levels, tenant profiles, and investment dynamics. Here are the key neighborhoods that multifamily investors should evaluate.

Downtown LA (DTLA) has seen massive development over the past decade, with luxury high-rises transforming the skyline. Average rents for newer units exceed $2,800 per month, but vacancy in the 4- and 5-Star segment sits at 8.7%. Investors targeting DTLA should focus on adaptive reuse projects or well-located Class B buildings where rents have room to grow.

Koreatown remains one of LA's most active multifamily investment corridors. The neighborhood's dense population, transit access, and aging building stock create strong value-add potential. Many 1960s and 1970s-era buildings trade at cap rates of 5.0% to 5.5%, and unit renovations can push rents significantly higher. A large share of Koreatown's inventory falls under RSO, so factor in rent increase limitations.

Hollywood and East Hollywood benefit from proximity to entertainment studios and nightlife, drawing a young renter demographic willing to pay premium rents. Mid-rise apartment buildings along major corridors like Sunset and Hollywood Boulevard offer solid cash flow with moderate vacancy.

Mid-Wilshire and Miracle Mile sit between DTLA and the Westside, offering renters a central location with access to the new Metro Purple Line extension. This transit improvement is driving investment interest and supporting rent growth in adjacent blocks.

Westlake and Pico-Union provide some of the highest cap rates in central LA. These neighborhoods cater to working-class tenants and feature lower per-unit acquisition costs. Investors willing to manage older buildings can achieve strong cash-on-cash returns, particularly with bridge loan financing for renovations.

South LA (Vermont Corridor, Leimert Park, Hyde Park) offers emerging value as the Crenshaw/LAX Metro line improves accessibility. Per-unit prices remain well below the metro average, and local revitalization efforts are attracting new commercial tenants.

San Fernando Valley (Van Nuys, North Hollywood, Sherman Oaks) attracts investors seeking lower entry points compared to LA's Westside. The Valley's multifamily stock is heavily RSO-regulated, but strong rental demand from young professionals priced out of central LA neighborhoods supports consistent occupancy above 95%.

How Does the Rent Stabilization Ordinance Affect Multifamily Financing in LA?

The LA Rent Stabilization Ordinance (RSO) governs roughly 650,000 rental units built on or before October 1, 1978, and it directly impacts how lenders underwrite apartment building loans. Understanding RSO is not optional for LA multifamily investors because it shapes revenue projections, property valuations, and exit strategies.

In late 2025, the Los Angeles City Council approved significant changes to the RSO formula. Starting in 2026, annual rent increases for RSO units are capped between a floor of 1% and a ceiling of 4%, tied to 90% of the Consumer Price Index. This represents a major reduction from the previous framework, which allowed increases up to 8% with a 3% floor. The council also eliminated the additional 1% surcharge for master-metered gas and electricity, affecting roughly 20% of all RSO units.

Landlords must also pay a per-unit RSO registration fee, which is set to reach $146.88 per unit for fiscal year 2026-2027. For a 50-unit building, that translates to over $7,300 in annual regulatory fees alone.

From a financing perspective, lenders treat RSO properties differently than market-rate buildings. Underwriters typically stress-test income growth at the RSO maximum rather than market rent projections, which can reduce the appraised value and limit loan proceeds. Borrowers seeking maximum leverage on RSO buildings should present detailed rent rolls showing the gap between current RSO rents and market rents, since this "loss-to-lease" represents upside that can be captured through tenant turnover under Costa-Hawkins vacancy decontrol.

What Are the Typical Loan Terms for 5+ Unit Buildings in Los Angeles?

Lenders evaluate LA multifamily properties based on several standard metrics. Here is what to expect when applying for apartment building financing.

Loan-to-Value (LTV): Most conventional and agency lenders cap LTV at 75% to 80% for stabilized properties. FHA programs can reach 83.3%. Bridge loans may go up to 80% of as-is value or 70% of after-renovation value.

Debt Service Coverage Ratio (DSCR): The minimum DSCR threshold for most LA apartment loans is 1.20x to 1.25x. This means the property's net operating income must exceed annual debt payments by at least 20% to 25%. Use our DSCR calculator to estimate your property's coverage ratio before applying.

Amortization: Agency loans typically amortize over 30 years. FHA/HUD loans can stretch to 35 or even 40 years, which significantly reduces monthly payments and improves cash flow. Bridge loans are generally interest-only.

Prepayment Penalties: Agency and CMBS loans come with yield maintenance or defeasance requirements. Make sure you understand the prepayment structure before locking in, especially if you plan to sell or refinance within five years.

Reserves: Expect lenders to require replacement reserves of $250 to $500 per unit annually, plus tax and insurance escrows. Properties in seismic zones (which includes most of LA) may also require earthquake insurance, adding to operating costs.

What Documents Do Lenders Require for LA Multifamily Loans?

Preparing a complete loan package upfront speeds up the approval process and signals professionalism to underwriters. For a typical Los Angeles apartment building loan, gather the following materials.

Property Documents: Current rent roll with unit-by-unit detail, trailing 12-month operating statements (T-12), last two years of property tax bills, copies of all leases, and a recent property inspection or appraisal if available.

Borrower Documents: Personal financial statement, last two years of federal tax returns, schedule of real estate owned, bank and brokerage statements showing liquidity, and a resume of real estate experience.

RSO-Specific Items: If the property falls under the Rent Stabilization Ordinance, provide the current RSO registration certificate, documentation of allowable rent levels for each unit, and records of any capital improvement pass-throughs or primary renovation petitions filed with LAHD.

Entity Documents: Operating agreement or partnership agreement, articles of organization, EIN confirmation, and a certificate of good standing from the California Secretary of State.

How Should Investors Evaluate Multifamily Deals in a High-Rate Environment?

With interest rates higher than the sub-4% levels of 2021, LA multifamily investors need to adjust their acquisition criteria. Here are strategies that work in today's market.

Target Value-Add Properties: Buildings with below-market rents, deferred maintenance, or poor management offer the best opportunity to create equity through operational improvements. The gap between RSO rents and market rents in neighborhoods like Koreatown and Hollywood can exceed 30%, providing significant upside as units turn over.

Use Interest-Only Bridge Financing Strategically: A two-year bridge loan with interest-only payments gives you time to renovate units, increase rents, and then refinance into permanent agency debt at a lower rate. Our commercial bridge loan guide walks through this strategy in detail.

Stress-Test at Higher Rates: Underwrite acquisitions assuming rates stay at current levels or increase slightly. If a deal only works with rate cuts, it is too thin. Model your exit refinance at 5.50% to 6.00% to build in a margin of safety.

Focus on Per-Unit Metrics: In LA, the average price per unit is roughly $368,000, but this varies enormously by neighborhood. South LA and parts of the Valley offer entry points below $200,000 per unit, while Westside locations can exceed $500,000 per unit. Compare per-unit acquisition cost against achievable rents to identify neighborhoods with the best yield profiles.

Use our commercial mortgage calculator to model different scenarios and compare monthly payments across loan structures.

What Is the Process for Getting a Multifamily Loan in Los Angeles?

The apartment building financing process in LA follows a structured timeline, though exact duration varies by loan type. Here is a typical workflow from initial inquiry to funding.

The fastest path to closing is through bridge lenders, who can fund in as little as two to three weeks. Agency loans from Fannie Mae and Freddie Mac typically take 45 to 60 days. FHA/HUD loans have the longest timeline at four to six months or more, reflecting the extensive government review process.

Working with an experienced LA multifamily lender who understands local market dynamics, RSO regulations, and seismic requirements can shave weeks off the process and help you avoid common underwriting pitfalls.

What Makes Los Angeles Unique for Multifamily Financing?

Several factors set the LA apartment financing landscape apart from other major metros.

Seismic Considerations: Many older apartment buildings in LA fall under the city's mandatory seismic retrofit program. Soft-story buildings (typically wood-frame structures with tuck-under parking) must be retrofitted to meet current earthquake safety standards. Lenders factor retrofit costs into their underwriting, and some require proof of compliance before funding. Retrofit costs typically range from $50,000 to $200,000+ depending on building size.

Measure ULA (Transfer Tax): Properties that sell for over $5 million are subject to an additional 4% transfer tax, and those over $10 million face a 5.5% tax. This "mansion tax" significantly affects multifamily deal economics and has shifted some investors toward smaller buildings or properties just below the threshold.

Accessory Dwelling Units (ADUs): California's permissive ADU laws allow apartment building owners to add units without triggering RSO requirements on the new construction. Several lenders now offer renovation loans that include ADU construction costs, boosting a property's income potential and appraised value.

Local Hiring and Prevailing Wage: Projects that receive certain tax incentives or public financing may trigger local hiring requirements and prevailing wage mandates, increasing construction costs by 20% to 30%.

Frequently Asked Questions About Multifamily Loans in Los Angeles

What is the minimum loan amount for an LA apartment building? Most agency and CMBS lenders require a minimum of $1 million to $1.5 million. Some bridge lenders will fund loans as small as $500,000, but smaller loans often carry higher rates and fees. For buildings with fewer than 10 units, a DSCR loan may be the most accessible option.

Can I get a multifamily loan on an RSO property? Yes. Lenders regularly finance RSO buildings throughout Los Angeles. However, underwriting will reflect the constrained rent growth allowed under the ordinance (now 1% to 4% annually). Having a clear rent roll that documents loss-to-lease and a history of tenant turnover strengthens your application.

How much do I need for a down payment on an LA apartment building? Expect to put down 20% to 25% for most conventional and agency loans. FHA programs require approximately 17% down. Bridge lenders may allow higher leverage on after-renovation value, but cash equity of at least 20% of the purchase price is standard.

Are multifamily loans in LA non-recourse? Agency loans (Fannie Mae, Freddie Mac) and CMBS loans are generally non-recourse, meaning the lender's claim is limited to the property itself rather than the borrower's personal assets. However, standard "bad boy" carve-outs for fraud, environmental issues, and misrepresentation still apply.

How long does it take to close a multifamily loan in Los Angeles? Bridge loans can close in two to four weeks. Conventional and agency loans typically take 45 to 60 days. FHA/HUD financing can take four to six months due to the government review process.

Should I buy a market-rate building or an RSO building in LA? Both strategies work, but they suit different investor profiles. RSO buildings typically offer lower per-unit prices and immediate cash flow but limited rent growth. Market-rate buildings (built after 1978) offer more pricing flexibility but trade at higher per-unit costs and tighter cap rates. Many successful LA investors own a mix of both.

Ready to Finance Your Los Angeles Apartment Building?

Whether you are acquiring your first 5-unit building in the Valley or refinancing a 100-unit portfolio in Mid-Wilshire, our team specializes in multifamily financing across every Los Angeles sub-market. We work with agency, bridge, CMBS, and private lenders to structure the right loan for your specific property and investment strategy.

Contact us today to discuss your LA multifamily deal and get a custom rate quote. You can also explore our full range of commercial loan programs in Los Angeles to find the right fit for your next investment.

For a deeper dive into specific loan structures, visit our guides on DSCR loans, bridge loans, and SBA financing. Or use our DSCR calculator and commercial mortgage calculator to start running numbers on your target property right now.