Phoenix has cemented its position as one of the most active multifamily investment markets in the United States. With Maricopa County adding 57,471 new residents in 2024 alone and ranking first in the nation for net migration, demand for rental housing continues to outpace most Sun Belt competitors. Net absorption surpassed 21,000 apartment units over the past 12 months, and the metro's 5.18 million residents are projected to keep growing at roughly 266 people per day. Whether you are acquiring a 20-unit complex in Tempe, developing a Class A mid-rise along the Camelback Corridor, or refinancing a value-add property in Mesa, understanding your multifamily loan options is the first step toward a successful deal.
Clear House Lending provides multifamily financing across the Greater Phoenix metro, from conventional apartment loans and DSCR programs to bridge financing for repositioning plays. This guide covers current market conditions, loan programs, interest rates, and submarket-level insights to help you navigate Phoenix multifamily lending in 2026.
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What Does the Phoenix Multifamily Market Look Like in 2026?
The Phoenix multifamily market ended 2025 in a transitional state that sets up a more favorable environment for investors entering 2026. Area vacancy settled at approximately 7.5%, roughly 50 basis points lower than earlier forecasts, demonstrating that absorption has kept pace with the wave of new supply that defined the past two years.
Average asking rents fell 2.8% year-over-year to approximately $1,600 per unit through late 2025, extending a two-year stretch of negative rent growth that began after rents peaked in 2022. Current rents sit more than 8% below those 2022 highs. While that decline has been painful for owners who acquired at peak pricing, it has also created buying opportunities for investors who can underwrite to current fundamentals rather than trailing pro formas.
The most significant shift heading into 2026 is on the supply side. Completions are projected to fall by nearly 50% across the metro, which means existing properties will face substantially less competition from brand-new lease-ups. This supply slowdown is expected to tighten vacancies gradually and allow rent growth to recover toward the pre-pandemic historical average of approximately 5% by late 2026 and into 2027.
Investment sales activity showed clear signs of acceleration in 2025. Class B property transactions jumped nearly 70% from the prior year, while Class C trades rose more than 50%. The median price for newer Class B properties reached approximately $303,600 per unit during Q3 2025, while the broader market averaged around $249,521 to $269,000 per unit depending on the submarket and vintage. Cap rates held steady around 4.8% on average, with Class A properties compressing to 4.74%, Class B assets at 4.92%, and Class C multifamily averaging 5.38%.
For investors, the combination of declining supply, accelerating absorption, recovering rents, and an active transaction market makes Phoenix one of the most compelling multifamily acquisition environments in the country heading into the second half of 2026.
What Multifamily Loan Programs Are Available in Phoenix?
Phoenix multifamily borrowers have access to a full range of financing options. The right loan structure depends on your property size, stabilization status, investment timeline, and financial profile.
Conventional Multifamily Loans are the standard financing tool for stabilized apartment properties with strong occupancy and cash flow. These loans offer fixed rates for 5, 7, or 10 years with 25- to 30-year amortization schedules. Loan-to-value ratios typically range from 65% to 75%, and lenders look for a debt service coverage ratio of at least 1.25x. These loans work well for garden-style complexes, mid-rise apartments, and portfolio acquisitions across the Phoenix metro.
Agency Loans (Fannie Mae and Freddie Mac) are a cornerstone of multifamily finance in Phoenix. These government-sponsored programs offer some of the lowest rates available, with terms up to 30 years and LTVs as high as 80%. They are available for properties with five or more units and are particularly attractive for stabilized assets in established submarkets like Scottsdale, Chandler, and Gilbert. As of early 2026, Fannie Mae rates in Phoenix start around 5.64%.
Bridge Loans provide short-term capital for acquisitions, lease-up, and repositioning scenarios where the property does not yet qualify for permanent financing. In a market with as many value-add opportunities as Phoenix, bridge financing allows investors to close quickly, execute renovations, stabilize occupancy, and then refinance into a lower-rate permanent loan. Terms range from 6 to 36 months with rates from 7.50% to 10.50%.
DSCR Loans evaluate the property's income rather than the borrower's personal earnings, making them popular among investors with multiple properties or complex tax situations. DSCR loan programs in Phoenix typically require a minimum debt service coverage ratio of 1.25x and down payments of 20% to 35%. These are ideal for smaller multifamily properties in the 5- to 50-unit range.
FHA/HUD Multifamily Loans offer extremely favorable terms for qualifying properties, including 35-year fully amortizing loans, non-recourse structures, and rates starting around 5.64% as of early 2026. The underwriting process is longer than conventional loans, but the terms are among the best available for borrowers who can accommodate the timeline.
Hard Money Loans serve investors who need speed above all else. These asset-based loans can close in as little as 7 to 14 days, making them useful for auction purchases, off-market deals, and properties that need significant work before qualifying for traditional financing. Rates range from 9% to 12.75%, with LTVs of 50% to 70%.
To estimate your monthly payments and debt service coverage on any of these programs, use our commercial mortgage calculator or DSCR calculator.
What Are Current Multifamily Loan Rates in Phoenix?
As of early 2026, multifamily loan rates in Phoenix reflect both the Federal Reserve's rate-cutting cycle that began in late 2024 and the strong investor demand for Sun Belt apartment assets. Rates vary significantly by loan program and borrower profile.
Agency loans through Fannie Mae and Freddie Mac offer the lowest starting rates, beginning around 5.64% for well-qualified borrowers with stabilized properties. Conventional multifamily mortgages range from 5.50% to 7.25%, depending on leverage, term, and property quality. DSCR loans currently fall in the 6.25% to 8.50% range, with rates influenced heavily by the property's net operating income relative to debt service.
Bridge loans carry rates from 7.50% to 10.50%, reflecting their short-term nature and the transitional profile of the collateral. Hard money loans command the highest rates at 9.00% to 12.75%, the premium borrowers pay for speed and flexibility.
The Federal Reserve cut the federal funds rate by a total of 100 basis points between September and December 2024, and this easing cycle has worked its way through to commercial mortgage rates. While further cuts depend on inflation and employment data, the current rate environment represents a meaningful improvement over 2023 peaks and has helped catalyze the transaction volume increase seen throughout 2025.
Which Phoenix Submarkets Are Best for Multifamily Investment?
Greater Phoenix spans a vast metro area with distinct submarkets, each offering different risk-return profiles for multifamily investors. Understanding these local dynamics is critical when structuring your acquisition and financing strategy.
Downtown Phoenix and Midtown represent the urban core, where a growing inventory of mid-rise and high-rise apartments caters to young professionals drawn by the expanding tech sector, Arizona State University's downtown campus, and a vibrant dining and entertainment scene. Cap rates in this submarket trend toward the lower end of the spectrum, generally 4.5% to 5.0%, reflecting strong demand and newer construction.
Camelback Corridor and Arcadia are among the most affluent submarkets in the metro. Luxury apartment communities along Camelback Road and in the Arcadia neighborhood command some of the highest rents in the Valley, with average asking rents exceeding $2,000 per month. Investors in this submarket target Class A product and are often willing to accept compressed cap rates in exchange for premium tenant profiles and lower turnover.
Scottsdale attracts significant investor interest as one of the most desirable residential markets in Arizona. North Scottsdale and the Scottsdale Airpark area have seen strong development activity, and cap rates for Class A multifamily have compressed below 5.0%. The submarket benefits from high household incomes, strong retail amenities, and proximity to major employers in the healthcare and financial services sectors.
Tempe is anchored by Arizona State University's main campus and benefits from a large, reliable renter pool. The city's Mill Avenue corridor and surrounding neighborhoods support a mix of student-oriented and market-rate multifamily. Tempe's transit connectivity via the Valley Metro light rail adds further appeal for renters and investors.
Mesa and Gilbert represent the East Valley's growth engines. Mesa, the third-largest city in Arizona, has attracted technology employers including Apple's global command center and a growing aerospace cluster at Phoenix-Mesa Gateway Airport. Gilbert, consistently ranked among the best places to live in Arizona, offers newer suburban apartment communities with strong occupancy rates. Both submarkets offer cap rates in the 5.0% to 5.5% range, providing higher yields than the urban core.
Chandler has emerged as a technology hub anchored by Intel's massive semiconductor fabrication facilities, which are receiving billions in expansion investment. The resulting job growth directly drives multifamily demand, making Chandler one of the strongest absorption stories in the East Valley. DSCR ratios on Chandler multifamily properties tend to be healthy, reflecting robust rental income relative to operating costs.
West Valley (Goodyear, Avondale, Buckeye) represents the metro's fastest-growing frontier. Buckeye has been one of the fastest-growing cities in the nation for several years, and the broader West Valley is attracting both residents priced out of the East Valley and workers at the region's expanding industrial and logistics corridor. While multifamily inventory here is thinner, the growth trajectory makes it an attractive development and acquisition target for investors with longer time horizons.
What Are the Requirements for a Multifamily Loan in Phoenix?
Multifamily loan requirements in Phoenix align with national standards, though the market's specific dynamics influence how lenders evaluate deals.
Down Payment: Conventional multifamily loans typically require 25% to 35% down. Agency loans through Fannie Mae and Freddie Mac may allow down payments as low as 20% for strong borrowers and stabilized properties. FHA/HUD loans can go as low as 15% down. DSCR loans generally require 20% to 35% down, depending on the property's cash flow and the borrower's experience.
Credit Score: Most conventional and agency lenders require a minimum credit score of 660 to 680. DSCR loan programs may accept scores as low as 640. Hard money lenders focus primarily on collateral value and may be more flexible on credit.
Debt Service Coverage Ratio: Lenders want to see a DSCR of at least 1.20x to 1.25x, meaning the property's net operating income should exceed annual debt payments by 20% to 25%. Given Phoenix's recent rent softness, lenders may apply conservative rent assumptions during underwriting, particularly for properties in submarkets with high new supply.
Property Documentation: Expect to provide trailing 12-month operating statements, current rent rolls, personal financial statements, tax returns (for non-DSCR loans), environmental reports, and a property appraisal. Properties with deferred maintenance may require a capital expenditure reserve escrow.
Experience: Lenders prefer borrowers with a track record in multifamily ownership or management. First-time apartment investors may face slightly higher rates or lower leverage, though partnering with an experienced operator can mitigate this.
Ready to discuss your specific situation? Contact our team for a personalized loan analysis based on your Phoenix multifamily property.
Why Are Investors Moving Capital Into Phoenix Multifamily?
Phoenix's multifamily market benefits from a convergence of demographic, economic, and structural forces that few other U.S. metros can match.
Population Growth: Maricopa County ranked first in the nation for net migration in 2024, adding 57,471 new residents. Arizona overall added 97,044 residents between July 2024 and July 2025, a 1.2% growth rate. Approximately 97% of this growth came from net migration, with a significant share driven by households relocating from higher-cost states like California. This demographic tailwind directly fuels apartment demand.
Tech Sector Expansion: Phoenix has become a major beneficiary of the tech industry's geographic diversification away from the Bay Area and Pacific Northwest. Apple, Intel, TSMC, Google, and Microsoft have all expanded operations in the Valley. Intel's $20 billion fabrication facility expansion in Chandler and TSMC's semiconductor plant in north Phoenix are creating thousands of high-paying jobs that generate sustained multifamily demand in surrounding submarkets.
Affordability Advantage: Despite being a major metro, Phoenix remains significantly more affordable than coastal cities. Average asking rents of approximately $1,600 per month are well below the national average of $1,980 and a fraction of what renters pay in Los Angeles, San Francisco, or New York. This cost advantage continues to attract both residents and employers.
Business-Friendly Environment: Arizona's business-friendly tax and regulatory environment, combined with its strategic location providing access to California markets and the Mexico border, makes Phoenix an attractive base for companies across technology, logistics, healthcare, and financial services. This economic diversification supports a broad renter base that is not dependent on any single industry.
Sun Belt Investment Thesis: Phoenix sits at the center of the broader Sun Belt investment thesis that has driven institutional capital flows for the past decade. The combination of population growth, job creation, favorable weather, lower operating costs, and a pro-development regulatory framework creates a structural demand story that institutional investors find compelling.
How Does the Phoenix Multifamily Market Compare to Other Sun Belt Cities?
Phoenix competes with several other Sun Belt metros for multifamily investment capital. Understanding how the market stacks up helps investors evaluate relative value and risk.
Compared to Dallas-Fort Worth, Phoenix offers similar population growth dynamics but has experienced more significant rent compression due to the supply wave. This creates a potential value play for investors who believe rents will recover as completions decline. Austin has faced even steeper rent declines than Phoenix, with vacancy rates approaching 9% in some submarkets, making Phoenix's 7.5% vacancy look relatively healthy by comparison.
Atlanta offers higher cap rates than Phoenix, typically 5.5% to 6.5%, but lacks the same population growth momentum. Tampa and Nashville present competitive alternatives with strong job growth, though their markets are smaller in scale.
Phoenix's primary competitive advantage is the combination of scale and growth. At over 5.1 million metro residents, it is large enough to attract institutional capital and support liquid transaction markets, while still delivering population growth rates that rival much smaller, faster-growing metros. The projected 50% decline in new completions for 2026 further differentiates Phoenix from peers that are still working through heavy supply pipelines.
How Does the Phoenix Multifamily Loan Process Work?
The multifamily loan process in Phoenix follows a structured path from initial qualification through closing. Understanding each stage helps you prepare the right documentation and set realistic timeline expectations.
The total timeline ranges from 30 to 60 days for conventional and DSCR loans, 7 to 21 days for bridge and hard money financing, and 60 to 120 days for FHA/HUD programs. Working with an experienced lender who knows the Phoenix market can significantly streamline the process, particularly during the property evaluation and underwriting stages where local market knowledge matters.
To get started, contact Clear House Lending for an initial consultation. We will review your property, investment strategy, and financial profile to recommend the optimal loan structure for your Phoenix multifamily acquisition or refinance.
Frequently Asked Questions
What is the minimum number of units needed to qualify for a multifamily loan in Phoenix?
Most commercial multifamily loan programs require a minimum of five residential units. Properties with two to four units are generally financed through residential mortgage programs. For agency loans through Fannie Mae and Freddie Mac, the minimum is typically five units. Bridge loans and DSCR loans may also start at five units, though some lenders will consider smaller properties on a case-by-case basis. The larger the property, the more financing options become available, with properties above 50 units often qualifying for the most competitive rates and terms.
Can I use a DSCR loan to buy an apartment building in Phoenix?
Yes, DSCR loans are one of the most popular financing tools for multifamily investors in Phoenix. These loans qualify based on the property's rental income rather than your personal income, making them ideal for investors who own multiple properties or have complex tax situations. The property's net operating income must typically cover at least 1.25 times the annual debt service. Use our DSCR calculator to estimate whether your target property meets this requirement before applying.
What cap rates should I expect for Phoenix multifamily properties in 2026?
Cap rates in Phoenix vary by property class and submarket. As of late 2025, Class A multifamily properties averaged 4.74%, Class B assets averaged 4.92%, and Class C properties averaged 5.38%. Premium submarkets like North Scottsdale and Deer Valley have seen cap rates compress below 5.0% for top-tier properties. East Valley markets like Mesa and Gilbert generally offer slightly higher yields in the 5.0% to 5.5% range. As supply tightens through 2026, cap rates may compress further, particularly for well-located Class B and C value-add opportunities.
Is Phoenix multifamily a good investment given recent rent declines?
While rents have declined approximately 8% from 2022 peaks, the fundamental investment thesis for Phoenix multifamily remains strong. New completions are projected to fall by nearly 50% in 2026, which should reduce competitive pressure on existing properties and allow rents to recover toward the historical average growth rate of approximately 5% annually. The metro continues to add population at one of the fastest rates in the nation, and the employment base is diversifying into high-wage sectors like semiconductor manufacturing and technology. Investors who can underwrite to current market rents rather than trailing peaks are well-positioned to benefit from the projected recovery.
How do Phoenix multifamily loan rates compare to national averages?
Phoenix multifamily loan rates generally track national averages closely, as commercial mortgage rates are driven primarily by Treasury yields and secondary market pricing rather than local geography. However, lenders with strong appetites for Sun Belt multifamily exposure may offer slightly more competitive terms for well-located Phoenix properties. As of early 2026, agency rates in Phoenix start around 5.64%, conventional loans from 5.50% to 7.25%, and DSCR loans from 6.25% to 8.50%. The metro's strong demographic fundamentals and transaction liquidity make it attractive to capital sources, which helps keep rates competitive.
What are the biggest risks of investing in Phoenix multifamily right now?
The primary near-term risk is the remaining supply overhang from the construction boom. While completions are expected to decline sharply in 2026, some submarkets still have significant new inventory to absorb. Rising insurance costs and property taxes are also pressuring operating expenses across the metro. Water availability, while managed through extensive infrastructure and conservation programs, remains a long-term consideration that some investors weigh. Finally, the market's popularity with institutional investors means competition for quality deals is intense, which can compress returns. Thorough due diligence, conservative underwriting, and working with lenders who understand Phoenix's submarket dynamics can help mitigate these risks.
Take the next step in your Phoenix multifamily investment. Contact Clear House Lending today for a free consultation and rate quote tailored to your specific property and investment goals.