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Fannie Mae Multi-Family Mortgage Guidelines On 2 To 4 Unit Homes

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Fannie Mae Multi-Family Mortgage Guidelines On 2 To 4 Unit Homes

This BLOG On Fannie Mae Multi-Family Mortgage Guidelines On 2 To 4 Unit Homes Was PUBLISHED On April 10th, 2019

Fannie Mae Multi-Family Mortgage Guidelines on down payment differs depending on owner occupant versus investment properties.

  • Home buyers can purchase both owner occupant and investment Multi-Family homes with conventional loans
  • With owner-occupant, homeowners can live in one of the units and rent the other units and receive rental income
  • Any residentially zoned properties up to 4 units can qualify for owner-occupant conventional loans
  • Both owner-occupant and investment multi-family properties can be a great investment due to its appreciation of potential and instant cash-flow
  • Fannie Mae Multi-Family Mortgage Guidelines on down payment is much higher than FHA’s 3.5% down payment requirement

In this blog, we will discuss Fannie Mae Multi-Family Mortgage Guidelines and Requirements.

Purchasing Multi-Unit Properties As An Investment

Multi-Family Properties are becoming increasingly popular.

  • Home buyers who need an owner-occupant home and want a great investment can purchase multi-family homes
  • This also holds true for first time home buyers and those without a family
  • After one year, homeowners with a multi-family property can be eligible for another owner-occupant property as long as they are buying a single-family home
  • They can exit the multi-family owner-occupant unit and rent it out
  • Becoming a first-time landlord is ideal with an owner-occupant multi-family home because it is easier to manage multiple tenants in one location and living in the same property

Down payment requirements differ based on owner-occupant versus investment homes.

Fannie Mae Multi-Family Mortgage Down Payment Guidelines

Fannie Mae Multi-Family Mortgage Down Payment Guidelines is different depending on owner-occupant versus investment properties. Loan to value caps is the difference when it comes to the type of refinancing as well. Here are the basic Fannie Mae Multi-Family Mortgage Guidelines on down payment and loan to value:

Down Payment Requirements on owner occupant two-unit properties:

  • The maximum loan-value on owner-occupant homes up to 2 units is 85% LTV and/or 15% down payment
  • 2 to 4 unit multi-family homes require an 80% LTV and/or 20% down payment
  • Gustan Cho Associates at Loan Cabin Inc. offers 5% down payment multi-family home financing: Contact us for more details at 262-716-8151 or text us for faster response

Investment property down payment requirements:

  • 2 to 4 unit investment homes require 25% down payment and/or 75% LTV

Refinance Conventional Guidelines On 2 To 4 Unit Properties:

  • Rate and term refinancing Loan To Value is listed above
  • Owner-occupant cash-out refinance on 2 to 4 units is capped at 75% LTV
  • Cash-Out refinance loan to value on investment 2 to 4 unit properties is capped at 70% LTV

Other Requirements

Borrowers of two to four unit properties need to meet all FANNIE MAE Multi-Unit Family Mortgage Guidelines.

  • 620 credit scores
  • Reserves
  • The minimum required reserves are 6 months  of PITI on multi-unit homes
  • With FHA, one-month reserves are required on two units and three months reserves are required on 3 to 4 unit homes
  • Debt to income ratios of not greater than 50%
  • Gustan Cho Associates at Loan Cabin Inc. is a direct lender with no overlays on government and conventional loans
  • We will go off Fannie Mae and Freddie Mac’s Automated Underwriting System’s findings

Can I Use Potential Rental Income As Qualified Income

Potential rental income can be used as qualified income on multi-family properties. Fannie Mae and Freddie Mac allow up to 75% of potential rental income to be used as qualified income. The potential rental income is determined by the home appraiser. Potential rental income can be used even though the units are vacant. HUD, the parent of FHA, allow up to 85% of potential rental income to be used as qualified income.

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