Multifamily Mortgage Loan Requirements | Multifamily Loans
Looking for multifamily mortgage loan requirements? Multifamily financing maximum loan-to-values vary by lender, which there are low down payment options. Some lender’s multifamily loan rates are more competitive than others. It can be easier to qualify for a mortgage when they do not have internal guidelines on top of multifamily mortgage loan requirements called an overlay.
Multifamily Mortgage Loan Requirements
The maximum loan to value depends on the borrower’s eligibility and the lender’s guidelines. The best way to determine what you can qualify for is to go through the pre-approval process.
Primary Residence Multifamily Financing Down Payment
- FHA minimum down payment requirement is 3.5%, but FHA grants are available for multi-unit properties.
- With Freddie Mac’s conventional Home Possible mortgage program, a borrower may be eligible as low as 5% down.
- When purchasing, Fannie Mae’s conventional guidelines allow 15% down for 2 units and 25% for 3 to 4 units.
- Maximum cash out refinance loan-to-value limits are 75% for 2 to 4 units.
- When purchasing, Freddie Mac’s guidelines are as follows:
- For a 2 unit primary residence the maximum loan-to-value is 85% and 80% for 3 to 4 units.
- When refinancing, a borrower may be eligible to cash out up to 75%.
Investment Property Multifamily Financing
For a purchase, Fannie Mae and Freddie Mac’s maximum multifamily financing loan-to-value ratios are 75% for 2 to 4 units. When refinancing, a borrower may be eligible to cash out up to 70% for 2 to 4 units.
Portfolio options are available with loan-to-values above 75% on multi-unit properties. Portfolio loan products are underwritten based on a more common sense approach to underwriting and vary on a case by case scenario.
Multifamily Financing Often Require Reserves
Depending on the route a borrower takes, reserves may be required, but the best way to tell is to work through the pre-approval process and run the case scenario by a licensed Mortgage Loan Originator so they can run the Automated Underwriting System (AUS).
Multifamily Loans Guidelines Can Vary
Some lenders have guidelines on top of agency guidelines called an overlay, which can make multifamily financing harder to obtain.
Some common overlays include:
- Bankruptcy seasoning.
- Minimum credit scores.
- Mortgage/rental history.
- Debt-to-income caps.
- Not allowing certain repayment plans.
- Not allowing transferred appraisals.
- Not allowing manual underwriting.
- And many others.
Multifamily Loan Rates
Multifamily loan rates vary by lender and often mortgage companies pricing depends on factors such as:
- Sales price.
- Appraised value.
- Loan-to-value.
- Occupancy type.
- Property type.
- Credit score.
- And other factors.
The best way to get a quote on an interest rate is to call a Mortgage Loan Originator to get live pricing.