For Essex County landlords and investors: financing two- to four-unit houses and small apartment buildings on their rent, how the ratio is worked out, and when a loan on your own income fits instead. These are business-purpose loans on investment property. Fidelity Residential is a direct, licensed mortgage lender with a New Jersey office on Route 36 in West Long Branch, in Monmouth County, and we lend across New Jersey.
Pick the closest, or call and talk it through.
Fidelity Residential · NMLS #103098 · Equal Housing Lender
Essex County is home to about 863,000 residents, in about 337,000 homes, according to 2020 to 2024 estimates from the Census Bureau’s American Community Survey. More households rent than own: an estimated 55.1 percent, about 176,200 households, are renters, and 44.9 percent own their home.
The estimated median value of owner-occupied homes in the county is about $524,100.
Fidelity Residential is a direct mortgage lender licensed in New Jersey under a Residential Mortgage Lender License. Our office is at 121 NJ-36, Suite 230, West Long Branch, in Monmouth County; we do not have an office in Essex County, and we lend across New Jersey.
Source: US Census Bureau, American Community Survey 5-year estimates, 2020 to 2024. Estimates, not counts.
DSCR stands for debt service coverage ratio. The lender compares the property’s monthly rent with its full monthly payment: principal, interest, property taxes, insurance and any association dues. That comparison takes the place of your personal income.
No tax returns, pay stubs or debt-to-income ratio are used. Your credit, your record of housing payments, the money for the down payment and reserves, and the appraisal are still checked. The rent used is generally the lower of the lease and the appraiser’s market rent.
It is a business-purpose loan on a property nobody on the loan will live in. Title can be in your own name or in a company, such as a limited liability company, and the owners back the loan personally.
The DSCR calculator works out the ratio from the rent and the costs you enter. It is an estimate, not a decision.
Say you are buying a three-family house in Essex County to rent out, and nobody on the loan will live in any of the units.
The rent. The rent of every unit counts. The figure used is generally the lower of the leases and the appraiser’s market rent.
The payment. Add up principal and interest, the property’s own tax bill, the insurance, flood insurance if the property needs it, and any association dues, all by the month.
The ratio. Divide the rent by the payment. A higher tax bill raises the payment without raising the rent, so the ratio goes down; a smaller loan lowers the principal and interest, so it goes up.
Ask for the current tax bill of the building itself before you sign a contract, because it feeds straight into the ratio. See DSCR loans in New Jersey.
A small apartment building is financed on its rent and valued like a small commercial property: the appraiser inspects every unit and reports the rent roll, and a second valuation is usual. Vacancies are limited, and short-term rental income is not counted.
Loans for five to ten units and mixed useA mixed-use building of two to eight units with homes and a shop, office or restaurant can be financed on the rent it brings in, when it is mainly residential.
Loans for five to ten units and mixed useSeveral rental homes of one to four units each can go under one loan for experienced investors.
Portfolio rental loansMost programs for buildings of this size want a recent record of owning and managing rental property.
A rental of one to four units can also be financed with a standard mortgage, underwritten on your own income, debts and credit. It is often a fit when your tax returns show your income and you have few other financed properties, because the agencies limit how many you can have. Gift money cannot be used on a rental, and savings after closing are required.
A DSCR loan is often a fit when you own several rentals, your returns show less income after write-offs, or you hold title in a company. Most of these programs want landlord experience and charge a prepayment penalty in the early years, where the law allows one.
If your tax returns show your income and your debts leave room, ask for a conventional quote too, and price both for the same property. See investment property loans.
Yes. Fidelity Residential is a dba of PFN Lending Group, Inc. (NMLS #103098), which holds a New Jersey Residential Mortgage Lender License, and we lend across New Jersey. You can check the licence on NMLS Consumer Access (opens in a new tab).
No. Our office is at 121 NJ-36, Suite 230, West Long Branch, NJ 07764, in Monmouth County. Call 732-686-9999 to talk with a licensed loan officer.
Not with these loans. Nobody on the loan may live in the property, and you sign a statement saying so. If you will live in one unit of a two- to four-unit house, ask about an FHA or VA loan for the home you live in instead.
Divide the monthly rent the lender counts by the full monthly payment: principal, interest, property taxes, insurance and any association dues. The rent counted is generally the lower of the lease and the appraiser’s market rent. Use the property’s own tax bill, and add flood insurance if the property needs it.
Most programs want some, and you list the rentals you own where the program asks. Some programs accept first-time investors on tighter terms. Loans on buildings of five to ten units and mixed use are for experienced landlords.
A home you are buying to rent out can be financed on its rent, taken from the appraiser’s rent schedule. A vacant property can lower how much you can borrow against the value, so tell your loan officer at the start whether the property is rented or vacant.
Get a quote online, or call us and talk it through with a licensed loan officer.
Business purpose investor loans are for investment property only.
This page is general information, not a commitment to lend. Programs, terms and eligibility depend on credit, income, property and underwriting review and are subject to change without notice.
Reviewed by Robert Shamie, CEO, NMLS #241428 · Last reviewed:
Fidelity Residential (PFN Lending Group, Inc., NMLS #103098) is a direct mortgage lender licensed in 40 states and the District of Columbia, with 26 years in business.