--- title: "Multifamily Real Estate Loans: definition, formula, and thresholds" description: "Multifamily Loans are mortgages secured by residential properties with 5 or more dwelling units: apartment buildings, garden complexes, mid-rise rentals. Multifamily is the smallest CRE subcategory at most banks but the fastest-growing." canonical_url: https://www.bankregreports.com/glossary/multifamily-loans/ source: BankRegReports category: "Asset Quality" units: "$" schedule: "Schedule RC-C" --- # Multifamily Real Estate Loans > Multifamily Loans are mortgages secured by residential properties with 5 or more dwelling units: apartment buildings, garden complexes, mid-rise rentals. Multifamily is the smallest CRE subcategory at most banks but the fastest-growing. ## Formula ``` Multifamily Loans are reported on Call Report Schedule RC-C, Line 1.d. ``` Multifamily is a distinct call-report category separate from owner-occupied 1-4 family, commercial real estate (nonfarm nonresidential), and construction. The 5-unit-or-more threshold is the definitional boundary. Mixed-use properties are categorized by primary use. ## Why it matters Multifamily was the favorite CRE subcategory during the 2020-2023 rent-growth cycle and is now the weakest as Sun Belt oversupply and rent-growth deceleration compress operating cash flow. Loan refinancing at materially higher rates is the central credit story: many properties cannot service the higher coupon at current operating economics. ## How to read it Multifamily / Total Loans varies by geography. NY City community banks may run 30-40% multifamily; Sun Belt regional banks may run 5-10%. Multifamily counts toward the 2006 interagency CRE screen: total CRE of 300% or more of total capital with 50% or more growth over 36 months. ## Thresholds | Range | Reading | What it means | |---|---|---| | < 5% of loans | Limited | Modest exposure. | | 5–15% | Material | Active multifamily lender. | | 15–30% | Heavy | Concentrated; examine geography. | | > 30% | Concentrated | Single-product specialization. | ## Worked example New York Community Bancorp reported approximately $37B of multifamily loans at year-end 2023, over 40% of its total loan portfolio. The concentration was the central driver of credit concerns through 2024 as NY rent-stabilized property valuations declined. ## Questions ### Is multifamily considered CRE? Regulators include multifamily in the CRE concentration calculation under the 2006 interagency guidance, alongside construction and land development loans, non-owner-occupied commercial real estate, and loans to finance CRE that are not secured by real estate. Owner-occupied CRE is excluded. Bank reporting conventions sometimes treat multifamily as distinct. ### Why did multifamily come under stress in 2024? Rapid rate increases on rate-resetting and refinancing loans; deceleration in rent growth, particularly in Sun Belt markets that had overbuilt; NY rent-stabilization regulation tightening that limited operating cash-flow growth in stabilized portfolios. ### How are stress losses likely to evolve? Multifamily losses are driven by property-level cash flow. Losses tend to lag rate cycles by 6-18 months as refinancings hit. The 2024-2026 refinancing wave is the key window for charge-off acceleration in multifamily portfolios. ## Sources - [FFIEC Call Report Schedule RC-C, Line 1.d](https://www.ffiec.gov/sites/default/files/data/reporting-forms/FFIEC031_FFIEC041_202606_i.pdf) (PDF) - Federal Reserve Z.1: Multifamily Residential Mortgage Liabilities ## Related metrics - [Commercial Real Estate Loans](https://www.bankregreports.com/glossary/cre-loans/): Commercial real estate (CRE) loans are credit secured by income-producing or owner-occupied commercial property: office, retail, multifamily, industrial. They are the largest asset class at many community banks and the focus of intense supervisory attention since 2023. - [Commercial Real Estate Concentration Ratio](https://www.bankregreports.com/glossary/cre-concentration/): The CRE Concentration Ratio measures supervisory commercial real estate loans (construction and land development + multifamily + non-owner-occupied CRE + loans to finance CRE not secured by real estate) as a percentage of Tier 1 capital plus the allowance for credit losses. The interagency guidance threshold of 300% is the most-watched CRE risk indicator in community banking. - [Construction & Land Development Loans](https://www.bankregreports.com/glossary/construction-land-development-loans/): Construction and land development (C&D) loans finance the building and preparation of real estate before it generates income. They are the highest-risk slice of commercial real estate and carry their own supervisory concentration guidance. - [Residential Real Estate Loans](https://www.bankregreports.com/glossary/residential-real-estate-loans/): Residential Real Estate Loans (1-4 family mortgages) are loans secured by owner-occupied or investor-owned residential property with 1-4 dwelling units. Roughly $2.5T of bank-held 1-4 family loans makes this one of the largest single asset classes in US banking. ## About this document This is the markdown twin of the page named in `canonical_url` above. Source filings are public record; the cleaning, normalization, cross-source linkage, and derived metrics are BankRegReports' own. Attribute with a link to the canonical URL. Markdown twins are published for editorial content only. Institution data pages do not have them. 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