Conventional or FHA Loan for 3-Unit?

Question

Hi All, I am looking to purchase a 3 unit property as a primary residence (live in one, rent out other two). Do I have to use an FHA loan or can I do a 5% down conventional loan? I have been told different things by different people, such as I can only use a conventional loan for a single family home. Wondering if this is true? Any input is appreciated!

Harjeet Bhatti · Answer

@Mykhail Bolden If its investment 25% down payment for 2-4 units. If its primary home 5% down payment under home possible. Nothing change in conventional loan so far due to pandemic. Simply follow the guidelines of Fannie and Freddie.

Harjeet Bhatti · Answer

@Mia G. Home Possible is Freddie Mac product. It is  income and area restricted. If you qualified under their income guidleins this is great product.

Wayne Brooks · Answer

Use can use a “normal” conventional (Fannie/Freddie) loan for an owner occupied 3 plex, but the down payment is 25%, not 5% like it is for a sfh.

Mykhail Bolden · Answer

@Harjeet Bhatti

What are your bank requirements to close on a 3 flat during this pandemic? DTI, reserves, credit score, etc?

Mia G. · Answer

@Harjeet Bhatti Thank you! Would Home Possible be more similar to a conventional loan? Or is it more like FHA with it's requirements? Trying to figure out what would be an easier process to go through.

Harjeet Bhatti · Answer

@Mia G. You can use both products. Home Possible is income and area restricted with 5% down payment. FHA has 3.50% down payment requirement.