owner occupied triplex with 10% down?

9 Replies

Just placed my first offer today. It's a triplex in a short-sale. The asking price is 15% less than the assessed value and I offered 5% less than that, so it is like the bank won't go for it, but we'll see. My agent has me a little worried about the down payment. He seems to be under the impression that because it is a multifamily I will be required to put at least 25% down, and he doesn't think that it matters if it is owner occupied or the number of units. While we were at his office he asked another agent who is also under the same impression. I've been hanging around bigger pockets for a few months now and have been doing a lot of research on my own and everything I've come across points to the fact that if the property is owner-occupied and 4 units or less, then the mortgage requirements aren't necessarily any different then a single family, am I missing something here, or is the agent misinformed? I was pre approved for a loan with a 10% down payment with the understanding that it would be owner occupied (there was no discussion of single vs multifamily in the pre approval process) and I'm under the impression that I may even be able to qualify for an FHA loan which would allow for an even lower down payment? I live in Vermont if that makes any difference.

You should try to get preapproved for an FHA loan. With fha it is 3.5% down payment and as long as you owner occupy you can get a multifamily up to 4 units. We are doing the same thing right now in Vermont. Did you go to a bank to get preapproved? You may need to go to a mortgage broker for fha. Also, they should be able to account for 70-80% of the rental income toward your mortgage so you could afford more. Hope this helps.

You can do a FHA loan for owner occupied for anything under 4 units. More importantly than your real estate agent, talk to your lender about this but I'm sure they will agree with me. FHA is only 3.5% down so it is a huge difference.

@nicolecarney @Stephenbell @Peterk.

Thanks Everyone! I guess that's where the trouble is, I haven't specifically talked to the agent or my lender about FHA yet. I was under the impression I could do 10% down on a 4-plex owner occupied with Fannie or Freddie. I will call my lender on Monday. my pre approval came through a credit union (Vermont State Employee Credit Union) So the first step would be figuring out of they can do an FHA or find another lender.

Originally posted by @Josh Dillingham :

@nicolecarney @Stephenbell @Peterk.

Thanks Everyone! I guess that's where the trouble is, I haven't specifically talked to the agent or my lender about FHA yet. I was under the impression I could do 10% down on a 4-plex owner occupied with Fannie or Freddie. I will call my lender on Monday. my pre approval came through a credit union (Vermont State Employee Credit Union) So the first step would be figuring out of they can do an FHA or find another lender.

 You can in Theory with "My community" conventional programs from fannie mae with as low as 5% down however, the issue is no mortgage insurance company I've been able to find has been willing to insure the loan. So the cart before the house or the other way around?

If memory serves me, VSECU will do FHA loans. You will want all this sorted out before you finalize an offer. It's a good idea to check with them as soon as possible.

 @Brenda Hedges :

If memory serves me, VSECU will do FHA loans. You will want all this sorted out before you finalize an offer. It's a good idea to check with them as soon as possible.

Thanks Brenda! My loan originator is away until Tuesday.  I have an email into her. I am sure the bank will come back with a counter so I should have enough time to get this all sorted out before any offer would be accepted.  Learning everyday, all part of the process, I guess.

@Josh Dillingham  You can buy 1-4 unit property with just 3.5% down using a FHA loan. There might be other options but would need to review your specifics to be able to figure out.

Upen Patel, Mortgage Banker

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