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Home Purchase

Multi-Family Mortgage Loan Requirements | Down Payment Options

byNicholas Auriemma, NMLS# 1455001
4 years ago
inPurchase, Refinance
Multi-Family Mortgage Loan Requirements Down Payment Options

Multi-Family Mortgage Loan Requirements | Down Payment Options

Multi-family mortgage loan requirements depend on the mortgage company and agency guidelines. Finding the right multi-family rates and multi-family mortgage company can be a difficult task.

The problem is multi-family property guidelines vary depending on guidelines and lenders. Understanding the requirements will save time and effort.

Multi-Family Mortgage Down Payment

The biggest factors that determine down payment options for multi-family property is credit, capacity, collateral, and intentions. You may get better terms when it comes to meeting traditional multi-family mortgage loan requirements.

The biggest factor on down payment options is occupancy type. Occupancy type can be broken down into:

  • Investment multi-family property.
  • Primary residence/owner occupied.
  • Secondary residence.

Debt-to-Income

Traditional mortgages require full documentation of income and debt-to income ratios. You can use future rental income to qualify. Non-traditional mortgages have debt-service coverage qualifying factors of the property and do not account for personal debt-to-income ratios.

Traditional Multi-Family Mortgages

Primary occupancy requires lower down payment options than the others.

  • FHA multi-unit mortgages require as little as 3.5% and borrowers can apply for a home grant.

Conventional multi-family mortgages depend on the number of units and loan program.

  • As little down payment as 5% for 2 to 4 units for a primary residence.
  • 25% down for investment 2 -4 unit properties.

2 to 4 Unit FHA Multi-Family Mortgages

FHA loans come with stipulations when it comes to financing for multi-units. Cases depend on the Automated Underwriting System (AUS), which is run during the pre-approval process.

3 to 4 unit require the property to pass the self sufficiency test:

  • All units, including the one being occupied, is multiplied by the greater of the appraiser’s estimate of vacancies or 75%.
  • The total mortgage payment (PITI) is than divided by the monthly net-self sufficiency income, which cannot exceed 100%.
  • The rental income can be used when verified by the mortgagee.

A minimum of three months mortgage payment (PITI) must be available and documented for reserves.

2 to 4 Unit Conventional Mortgage Options

For primary residences, Freddie Mac’s Home Possible program allows as little as 5% for the down payment for 2-4 units.

  • There are income restrictions on this loan program.

Multi-Family Mortgage Investment Options

The two big Government-Sponsered Enterprises (GSE) are Fannie Mae and Freddie Mac. They set standards on maximum loan-to-values, but some lenders do not follow all of their guidelines.

Fannie Mae’s Maximum Loan-to-Values

Purchase:

  • 2 unit primary – 15% down.
  • 3 to 4 unit primary – 25% down.
  • 2 to 4 unit investment – 25% down.

Cash out refinance:

  • 2 to 4 unit primary – up to 75% loan-to-value.
  • 2 to 4 unit investment – up to 70% loan-to-value.

Freddie Mac’s Maximum Loan-to-Value

Purchase:

  • 2 unit primary residence – 15% down.
  • 3 and 4 unit primary residence – 20% down.
  • 2 to 4 unit investment – 25% down.

Cash out refinance:

  • 2 to 4 unit primary – up to 75% loan-to-value.
  • 2 to 4 unit investment – up to 70% loan-to-value.

Non-traditional Multi-Family Mortgage Loan Requirements

Some loan programs loan-to-values go higher than traditional loans, but often depend on the debt-service ratio. These loans are financed and available through wholesale portfolio lending or Non-QM loans.

  • They have a more common sense approach to underwriting and every borrower’s case scenario is unique.
  • Underwriters will determine eligibility based on the ability to repay.

Multi-Family Rates

Multi-family rates vary depending on the lender. Nationwide mortgage rates change throughout the day.

In order to go over live pricing, a borrower should reach out to a licensed Loan Originator.

  • Live pricing is determined by the pricing adjustments.
  • Early locks are made available when proper disclosures are signed.

Rates are final when an interest rate is locked and the loan funds.

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Nicholas Auriemma, NMLS# 1455001

Nicholas Auriemma, NMLS# 1455001

Nicholas Auriemma is a Loan Originator at Nationwide Mortgage & Realty, LLC, providing information on mortgages that can often be confusing even to real estate and mortgage professionals. Borrowers can be discouraged because mortgage professionals can be mistaken due to guidelines always changing, the extent of guidelines, their company having an overlay (stricter guideline), or other lenders not offering a loan program. Call or text Nick anytime at 630-779-8430 or email at nick@nationwidemtg.net.

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  • Home
  • Request Information
    • Apply Now
  • About Us
    • Career Opportunities
    • Contact Us
    • Meet the Team
  • Purchase
    • Conventional Loan
    • Condotel & Non-Warrantable
    • FHA Loan
    • FHA 203k
    • Fix & Flip
    • Investment
    • Jumbo & High Balance
    • New Construction
    • Non-QM Loans
    • USDA Loan
    • VA Purchase Loan
  • Refinance
    • Cash Out & Debt Consolidation
    • Conventional Refinance
    • Condotel & Non-Warrantable
    • FHA 203k
    • FHA Streamline Refinance
    • Investment
    • Non-QM Loans
    • Reverse Mortgage
    • VA IRRRL
  • Loan Process
    • Application Checklist
    • Credit Report
    • Home Buying Do’s and Don’ts
    • Interest Rates
    • Mortgage Calculator
  • Mortgage Blogs
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Email:
info@nationwidemtg.net
Nationwide Mortgage & Realty, LLC
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​Oakbrook Terrace, IL 60181
NMLS # 276777
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