Buying Multi-Family Up to 4 Units

Lately, I have been hearing from many home buyers, ranging from the millennial to the seasoned investor, about multi-family.  As a residential mortgage loan officer, I can loan on up to 4-unit property types while keeping in the residential loan territory. Borrowers are approaching me about buying these properties not just to rent out, but also to live in and rent out together. Here are some key things to know when it comes to residential loans and multi- family homes.

Conventional (Fannie Mae/Freddie Mac)

Primary Home While Renting Remaining

  • 620 Credit Score
  • 15% down payment (2 unit)
  • 25% down payment (3 to 4 units)
  • 6 months asset reserves after down payment and closing costs paid
  • Market rental income can be used to offset the debt in relation to debt vs income ratio
  • Must occupy a unit of the property

Investment Property

  • 620 Credit Score
  • 30% down payment
  • 6 months asset reserves
  • Market rental income can be used to offset the debt in relation to debt vs income ratio
  • Interest rates highest on this program since labeled investment home

FHA

Primary Home While Renting

  • 580 Credit Score
  • 5% down payment
  • Reserves determined by automated approval system
  • Market rental income can be used to offset the debt in relation to debt vs income ratio
  • Must occupy a unit of the property

Increased Loan Limits in 2019

Rising home prices have caused many potential homebuyers to feel like they cannot afford to buy. Fortunately, FHA, VA, Fannie Mae, and Freddie Mac have increased their maximum loan amounts for 2019. These increases will allow more borrowers to qualify for the price points there are interested in. Below are the loan limits for Maricopa County in 2019:

  • FHA – $314,827
  • VA – $484,350
  • Conventional- $484,350

QUICK TIPS:

  1. Don’t open new debts while in contract
  2. Don’t quit your job
  3. Don’t deposit substantial amounts of cash into your bank account.
  4. Disclose all debts

Have a great month and let me know if you have any specific questions pertaining to your own personal situation.

By Andrew Augustyniak, Branch Manager Prime Lending