Owner-Occupant Multi-Family Mortgage Guidelines On 2 To 4 Units

This Article Is About Owner-Occupant Multi-Family Mortgage Guidelines On 2 To 4 Units 

Any property between one to four units is considered residential properties. One of the great benefits in buying a two to four unit multi-family home with an FHA loan is you only need to come up with a 3.5% down payment. This a great opportunity for homebuyers of two to four unit multi-family property to have rental income. HUD, the parent of FHA, requires buyers of multi-family homes need to occupy one of the units as their primary residence. They can rent out the other units and use the rental income to pay their housing payments.

There are instances where many owners of two to four unit properties have their rental income pay for their mortgage and all other housing expenses. Some 2 to 4 unit multi-family owners even have positive cash-flow after paying all housing expenses. Many two to four unit properties are selling really fast as soon as it hits the market. Two to four unit properties are in major demand. Some multi-family unit homebuyers wait months or years for two to four unit properties to hit the real estate market. 

Per Owner-Occupant Multi-Family Mortgage Guidelines On 2 To 4 Units Can I Qualify With No Landlord Experience?

Any multi-family unit property with less than four units is considered residential homes and is eligible for FHA financing.  No rental experience is required to qualify for an owner-occupant two to four unit multi-family building. Homebuyers and first time home buyers can qualify for owner-occupant financing on one to four-unit properties. Government and Conventional Loans has its own Owner-Occupant Multi-Family Mortgage Guidelines. Mortgage Guidelines will dictate the minimum down payment requirements. Mortgage Guidelines will also dictate whether or not borrowers can use potential rental income as qualified income.

Multi-Family Mortgage Guidelines Depends On Loan Program

Most buyers purchase two to four-unit residential buildings as rental properties. However, per Owner-Occupant Multi-Family Mortgage Guidelines, homebuyers can qualify for owner-occupant financing if they live on one of the units as their primary residence:

  • Multi-Family Mortgage Guidelines is dependent on the loan program borrowers chooses
  • There are Multi-Family Mortgage Guidelines and Lender Overlays
  • All lenders need to meet Owner-Occupant Multi-Family Mortgage Guidelines
  • However, it is up to an individual lender to have higher lending requirements
  • These higher mortgage requirements above and beyond Owner-Occupant Multi-Family Mortgage Guidelines is called lender overlays
  • Gustan Cho Associates Mortgage Group has no lender overlays on government and conventional loans

Government Loans are FHA, VA, USDA Loans. Fannie Mae and Freddie Mac Guidelines apply to conventional loans.

Owner-Occupant Multi-Family Mortgage Guidelines On Down Payment Requirements

Down payment requirements on owner occupant financing is much lower than investment properties:

  • HUD, the parent of FHA, requires 3.5% down payment on one to four-unit owner occupant properties
  • All government loans are for owner-occupant financing
  • Per Fannie Mae-Freddie Mac Owner-Occupant Multi-Family Mortgage Guidelines, Conventional Loans require 15% down payment on two-unit properties
  • Fannie Mae-Freddie Mac allows investment property financing on conventional loans
  • Conventional Loans require 25% down payment on investment property 2 to 4 unit financing
  • VA Loans allows 100% financing on one to four-unit owner occupant properties

USDA Loans do not require any down payment like VA Loans. Homebuyers can qualify for USDA on one unit properties only with no down payment. However, borrowers need to meet USDA Mortgage Guidelines and the property needs to be in a USDA designated area. USDA does not allow two to four-unit financing.

HUD Owner-Occupant Multi-Unit Mortgage Guidelineswhat are Owner-Occupant Multi-Family Mortgage Guidelines On Conventional Loans

HUD, the parent of FHA, requires a3.5% down payment on all one to four-unit properties. FHA allows 85% of potential rental income to be used as qualified income on debt to income ratio calculations. FHA loans come with stipulations when it comes to financing for multi-units. Potential rental income is derived by the home appraiser. Two unit properties require one month of reserves. Three to four units will require three months of reserves. One month of reserves is one month of principal, interest, taxes, insurance. It is often referred to as PITI.

Owner-Occupant Multi-Family Guidelines On Conventional Loans

Freddie Mac Home Possible Conventional Loan Programs allow 5% down payment on multi-family property financing.  Freddie Mac Home Possible loan programs program allows as little as 5% for the down payment for 2-4 units with no income restrictions. Freddie Mac requires a 15% down payment on two-unit owner-occupant home purchases. 3 to 4 units require a 20% down payment. 2 to 4 unit non-owner occupant investment properties require a 25% down payment.

Freddie Mac allows up to 75% LTV on cash-out refinance on owner occupant properties. Investment properties cash-out Freddie Guidelines allow up to 70% loan-to-value.

Down Payment Requirement On Conforming Loans

Fannie Mae’s primary owner-occupant multi-family mortgage guidelines require a 15% down payment on two to four unit multi-family homes. For those who want to put less down, it is best to see if they qualify for an FHA loan with 3.5% down payment. 3 to 4 units require a 25% down payment. Investment properties require a 25% down payment on 2 to 4 units. Fannie Mae owner-occupant multi-family mortgage guidelines on cash-out refinance on 2 to 4 unit homes allow up to 75% LTV. 2 to 4 unit investment properties allows up to 70% LTV. Homebuyers can purchase two to four unit multi-family homes with no money down and 100% financing with VA loans. 

Choosing A Lender With No Overlays

What may be the amount of the advance payment requirement for the loans granted

Borrowers who need to qualify for owner-occupant multi-family mortgage loans with a national mortgage company licensed in multiple-states with no lender overlays on 2 to 4 units can contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] Gustan Cho Associates is a national mortgage company licensed in multiple states with no overlays on government and conventional loans. Gustan Cho Associates also offer non-QM, mortgage one day out of bankruptcy, bank statement loans, asset-depletion mortgages, P and L stated income loans, and alternative financing mortgage programs. We are proud to have a national reputation of being a one-stop lending shop for owner-occupant homes, second homes, investment properties, and commercial loans. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.

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  • We have been denied of an approved FHA loan at the underwriting stage. I have a score of 779 and my wife has 734 we have 3.5% down . The house appraisal is 540,000.00 and accepted purchase is 510,500.00
    The reason of the denial is because we submitted all the documentation that the underwriter asked for. Including W2’s and tax returns. We are share holders of a C-Corporation and have control of the company. We are on the payroll as any other employee. Both of us have dual nationality and 2017, 2018, 2019 until May 2020 my wife an I worked at the San Diego office part time and in Mexico part time setting up a Mexican office of the corporation. Because we have dual nationality we declare income tax in Mexico and income tax in the USA. 2019 was the year that we spent more time in Mexico finishing the setup and training the manager that is in charge of that office. So we are now full-time in San Diego since May 2020 (The reason why we decided to go ahead and look for house to make it our primary residence). So making less money that year (2019) than the year before (2018) got the underwriter confused and he decided to ask for all kinds of documentation of the corporation, the corporation has an extension to do 2019 tax returns until October 15, The corporation is NOT trying to buy the house but me and wife as individuals. Getting all the documentation of the corporation will cost us a good amount of money in CPA fees and we are not willing to do that. My salary is $11,000.00 a month and I do get bonuses when I close contracts. My wife’s salary is $3,750.00 a month. We want to buy this 8.2 acre property in a rural area of San Diego. I found you on YouTube and you gave me confidence

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