Houston Apartment Loans
$1,000,000 Minimum

Houston Apartment Loan Rates - Rates updated June 15th, 2021

Houston Apartment Loan Rates Over $6,000,000 Rates (start as low as) LTV
Multifamily 5 Year Fixed Loan Rates 2.59% Up to 80% Get Free Quote
Multifamily 7 Year Fixed Loan Rates 2.73% Up to 80% Get Free Quote
Multifamily 10 Year Fixed Loan Rates 2.94% Up to 80% Get Free Quote
Houston Apartment Loan Rates Under $6,000,000 Rates (start as low as) LTV
Multifamily 5 Year Fixed Loan Rates 3.19% Up to 80% Get Free Quote
Multifamily 7 Year Fixed Loan Rates 3.20% Up to 80% Get Free Quote
Multifamily 10 Year Fixed Loan Rates 3.21% Up to 80% Get Free Quote
Houston Apartment Building Houston
Multifamily Loan

Select Commercial has excellent Houston multifamily loan products and options available for owners and purchasers of multifamily properties throughout the city of Houston. Whether you are looking to finance a small apartment building, a complex with hundreds of units, or a co-operative, we can help you find the optimal financing solution to meet your apartment mortgage loan needs. While we lend across the entire continental US, we are able to give our best rates and loan programs to certain areas that we feel are strong markets. Houston is one of the cities that we consider to be a premium market and we actively look to originate good quality loans here for our clients. We have a diverse array of many available loan products to help qualified Houston TX borrowers looking to purchase or refinance an apartment property. We offer apartment loans with terms and amortizations up to 30 years, recourse and non-recourse, and many options for prepayment. We typically approve apartment building loans within 1 day and usually close within 45 days of application. Our clients love our simplified application process, 24-hour pre-approvals with no-cost and no-obligation, great rates and terms, fast closings and personalized service. If you are looking to purchase or refinance an apartment building, don't hesitate to contact us.

Houston Apartment Loan Benefits

Houston Apartment Loan rates start as low as 2.59% (as of June 15th, 2021)
• No upfront application or processing fees 
• Simplified application process 
• Up to 80% LTV on apartment financing 
• Terms and amortizations up to 30 years 
• Apartment loans for purchase and refinance, including cash-out 
• 24 hour written pre-approvals with no cost and no obligation

Recent TRUSTPILOT Reviews

Select Commercial Funding Reviews from TRUSTPILOT

A three year journey
"Thanks Stephen for all of your hard work in getting our deal closed! I appreciate your professionalism and patience throughout a complicated process. You always were there for my partner and I whenever we had questions and needed answers quick. It was a pleasure to have worked with you and Select Commercial!"

Houston Apartment Loan Types We Serve

If you are looking to purchase or refinance a Houston apartment building, don't hesitate to contact us. We arrange financing in the city of Houston for the following:

  • Large urban high-rise apartment buildings
  • Suburban garden apartment complexes
  • Small apartment buildings containing 5+ units
  • Underlying cooperative apartment building loans
  • Portfolios of small apartment properties and/or single-family rental properties
  • Other multi-family and mixed-use properties

Recent Closings

Houston Multifamily Loan Information

Houston Economic Trends Houston Economic Trends

Developers Increase Focus on Vertical Concepts; Value-Add Strategies Maintain Momentum

Houston transitioning to higher-density multifamily development as urban core strengthens. Creating a more dense and vertical downtown remains top of mind for developers as apartment construction will stay concentrated in central Houston and surrounding neighborhoods. The inflow of millennials and empty nesters to the core seeking walkable communities will support the addition of 5,000 new multifamily units to the metro’s urban submarkets in 2020, highlighted by four 20-plus-story apartment complexes. Development will also be strong west of the core in Katy where 2,700 garden multifamily units will be delivered as builders attempt to keep stride with robust household formation. Katy sports one of the tightest vacancy rates in the metro at 5 percent, trailing several northern suburbs such as Cypress, Conroe and The Woodlands. Vacancy in these suburban cities will also likely remain compressed this year as apartment construction in these areas remains limited. Houston is a great place for investors to acquire their next property with an apartment loan.

Oil industry fueling demand for workforce housing, sustaining investor interest. Value-add opportunities continue to highlight apartment investment in the Bayou City, attracting a diverse pool of buyers. Pasadena and southeastern sections of Houston proper remain enticing to many multifamily investors as employees at the nearby refineries help keep vacancy rates relatively tight. Cap rates in this part of the market average in the mid-6 to low-7 percent range, in line with the metro average, with many of the apartment properties requiring substantial renovation. Higher yields can be found in neighborhoods just north of downtown Houston, with returns extending upward of 8 percent and per unit values averaging around $60,000. While value-add multifamily investments remain the primary component of deal flow, institutional buyers also remain active in Houston. Luxury assets along northern sections of the Beltway are highly targeted by many of these apartment investors as cap rates sit in the mid-4 to low-5 percent band. Buyers with similar interests home in on the Energy Corridor, but returns can dip below 4 percent in this region. The Houston market is a strong place for investors to take out a multifamily loan for their next purchase.

2020 Houston Apartment Market Forecast

Houston Completions vs. Absorption Houston Completions vs. Absorption

The Houston National Multifamily Index Rank is at 32, down 2 places. A surge in deliveries keeps vacancy above the national level, lowering Houston’s standing in this year’s NMI.

Employment in Houston is up 2.0%. Job creation is expected to slow this year as 63,200 position are generated, although growth will remain diverse, spearheaded by professional and business services, and manufacturing.

Construction in Houston is expected to exceed 11,800 units. Completions will nearly double relative to 2019 as builders capitalize on tighter submarkets.

Vacancy in Houston is up 20 bps. After a 150-basis-point drop last year, metro vacancy will climb to 5.8 percent in 2020 amid an influx of new units.

Rent in Houston is up 3.2%. The average effective rent is on track to reach $1,180 by year end as rent growth remains stable. The previous two years witnessed rental expansions of 4.1 percent and 2.5 percent.

The Houston market remains a strong investment opportunity for investors looking to finance their next purchase with an apartment loan. Limited available inventory will continue to put pressure on cap rates for many value-add assets, pushing yields below six percent in areas with consistently strong rental demand. We highly recommend investors looking to purchase in the Houston metro to pursue financing their acquisition with a multifamily loan.

Data provided by Marcus & Millichap.

Apartment Loan Trends in 2020

Houston Vacancy and Rents Houston Vacancy and Rents

At the start of 2020 the market outlook did not indicate any significant factors that would cause major trouble in the multifamily market. Market indicators suggested that demand for housing, especially for apartment rentals, would remain healthy, thus continuing to generate new construction of multifamily buildings. Both the high number of permits and starts over the past couple of years led experts to believe that developer confidence is very high in the multifamily market. Market experts predicted an annual completion of 340,000 apartment units over 2020, way above the 300,000-annual average for the past five years. Over the last couple of years, the multifamily market has seen absorptions outperform expectations due to both changes in lifestyle and demographic preferences and new supply has consistently taken longer to be built. These two factors have helped the market to perform stronger than expected in the past and should continue throughout this year. Market data indicated that rent growth would remain strong in 2020, growing 3.6% (which is above the historical average). In terms of mortgage origination, low interest rates and strong multifamily performance were expected to help loan volumes grow. Experts predicted that the origination volume in 2020 will increase by 5.7% to $390 billion. Market data indicated that cap rates have more room to decline, which would lead to increasing property values and should drive up origination volume. However, with the current outbreak of Covid-19, the overall economy has been in flux. The stock market has crashed and commercial mortgage interest rates have been severely impacted. Huge metros such as New York have all but shut down much economic activity and entertainment. In this unsteady climate, many investors are scared to purchase commercial real estate and to take out commercial mortgages and apartment loans. Additionally, the oil industry has taken a big hit. Not only are people traveling less due to the pandemic, foreign countries like China and Russia are involved in a huge price war which is driving the price of oil way down. Experts are hopeful that as the weather warms up and public health policy learns how to handle this pandemic, the economy should revert back to its pre-virus strength.

What Happened with Apartment Loans in 2019

Houston Sales Trends Houston Sales Trends

The multifamily market ended the 2019 year on a high note. Despite increased levels of new units entering the market, the apartment sector maintained strong and steady growth throughout the year. Vacancy rates throughout the country remained fairly stable, easing investors’ concerns of a significant decline in occupancy due to the high sum of multifamily units delivered. Furthermore, rent growth on the national and metropolitan levels remained healthy throughout the year. While 2019 rent growth was more modest than 2018, it was in line with 2016 and 2017 levels and remained above the national historic average of 3.4%. Based on data provided by the U.S. Census Bureau, multifamily completions increased slightly in 2019 when compared with 2018. The data also show that reported permit growth has increased 3% and starts are up 2%. Although 2019 data is not yet fully complete, these metrics suggest that the supply will remain elevated over the next few years. In terms of multifamily mortgage origination, the most up to date information has surpassed expectations. Mortgage Bankers Association reported that the 2018 mortgage volume came in at about $339 billion, an increase of 18.9% from 2017. While the actual 2019 numbers will not be available until later this year, experts estimate that due to solid fundamentals, low interest rates and heightened demand for multifamily investments, the total origination volume last year was about $369 billion.

The 2019 economy thrived overall. Throughout the year 2.1 million jobs were added which were in line with 2017 number (although it fell short of the 2018 total of 2.7 million). The unemployment rate also continued to decrease in 2019 as it went down 50 basis points to 3.5% at the end of the year. This number matched the lowest unemployment rate in fifty years. The labor market heavily supported increased salaries, as indicated by the 2.8% annual growth in the Employment Cost Index as of September of 2019. While these gains were below the expected amount for a market with such a low unemployment rate they were above the average for the past decade. At the beginning of the year many investors were concerned due to expectations of a recession. There were many indicators that supported this concern such as inverted two and ten year yield curves, an unanticipated rise in the June unemployment rate of ten basis points, an unstable stock market and slowed job growth. However, during the third and fourth quarters of 2019, the economy improved as job growth rose, the unemployment rate fell. This economic improvement has had a clear impact on the multifamily market as more investors are feeling bullish on putting their money into this asset class.

Houston Apartment Loan Options

Our company has multiple capital sources for these apartment loans, including: Fannie Mae, Freddie Mac, FHA, national banks, regional and local banks, insurance companies, Wall Street conduit lenders, credit unions and private lenders.

Fannie Mae Loan and Rate Information

Fannie Mae’s multifamily loan platform is one the leading sources of capital for apartment building loans in the US. Fannie Mae is a leader in the secondary market – meaning they purchase qualifying apartment loans from leading lenders who originate these loans for their borrowers. Fannie Mae purchases loans secured by conventional apartments, affordable housing properties, underlying cooperative apartment loans, senior housing, student housing, manufactured housing communities and mobile home parks on a nationwide basis. The Fannie Mae platform has many benefits, including:

  • Long term fixed rates and amortizations. Fannie Mae allows terms and amortizations of up to 30 years. Most banks offer only 5 or 10 year fixed rates and 25 year amortizations.
  • Non-recourse options. Most banks will require the borrower to sign personally for the loan. Fannie Mae offers non-recourse apartment loans.
  • Lending in smaller markets. Many national lenders do not like to lend in rural or tertiary markets. Fannie Mae is a good option for these loans.
  • Assumability and Supplemental Financing. Fannie Mae allows their loans to be assumed by a qualified borrower. They also have a program which allows borrowers the ability to come back and borrow additional funds during the life of the loan (subordinate financing).

Freddie Mac Loan and Rate Information

Freddie Mac Multifamily Loans provide mortgage capital in the secondary market for apartment building loans. Together, Fannie Mae and Freddie Mac control a very large portion of the multifamily loan market. Freddie Mac has a very aggressive program for small balance apartment loans (from $1,000,000 to $7,500,000). Some features of this program include:

  • Market size driven. Freddie Mac classifies loans by the size of the overall market: Top, Standard, Small, and Very Small. Rates are best in top market locations (major metropolitan areas).
  • Capped costs. Freddie Mac lenders often cap the closing costs at a fixed dollar amount, thereby lowering the overall cost to borrow money.
  • Flexible pre-pay penalties. Freddie Mac offers many options for pre-payment penalties, from yield maintenance to step-down to “soft” step-down.
  • Interest-Only (I/O) loans. Freddie Mac will allow payments consisting of only interest and no amortization of principal.
  • Fixed rate terms. Freddie Mac offers fixed rates of 5, 7, and 10 years, followed by an adjustable period. These loans are called Hybrid/Adjustables. Loans have a 20 year term and a 30 year amortization schedule.

Apartment Lending with Banks and Other Programs

While the agencies (Fannie Mae and Freddie Mac) offer some excellent programs, not every apartment loan applicant qualifies for these programs. We have many excellent choices for these loans with our correspondent banks, credit unions, insurance companies and private lenders. Some examples of these loans include:

  • Multifamily loans that require flexible underwriting or those that don’t meet standardized criteria.
  • Properties in less than desirable markets, or those that require repairs or updating.
  • Properties that don’t cash flow according to industry guidelines or lack stabilized cash flow.
  • Borrowers with past credit issues, including foreclosures, short sales, or judgements.
  • Borrowers who are not US citizens.

Whether you are purchasing or refinancing, we have the right solutions available for your multifamily mortgage loans. We will entertain apartment loan requests of all sizes, beginning at $1,000,000. Get started with a Free Commercial Mortgage Loan Quote.

Houston Apartment Building Loans

Select Commercial provides apartment loans and multifamily loans throughout Houston, Texas including, but not limited to, the areas below.

Afton Oaks • Larchmont • Shenandoah • Brentwood • Magnolia Grove • Southcrest • Briargrove Park • Montrose • Stablewood • City Park • Morningside Place • University Oaks • Clinton Park • Near North Side • Walnut Bend • Cloverland • Nottingham Forest • Westbury • Corinthian Pointe • Old Braeswood • West End • Crestwood • Pecan Park • Westmoreland • Eastwood • Port Houston • Willow Meadows • Garden Oaks • Rice Military • Willowbend • Highland Village • Robindell • Windsor Village • Houston Gardens • Royal Oaks Country Club • Woodland Heights • Idylwood • Settegast • Kashmere Gardens • Sharpstown