Los Angeles · Member since 2019 · 3 posts · 1 vote
I'm finishing up a lot of improvements to a four unit that I purchased in 2020. One of those improvements is a Junior ADU, which is technically a 5th unit. I've got a lot of new equity in this place and wanted to refinance but I keep reading that I'm now only eligible for commercial loans. This is the only property I own and it's my primary residence so I don't think I'm particularly attractive to commercial lenders. Is there any way to keep a residential loan with the 5th unit?
Hi Geoff, this is a great question and I don't think I have ever seen it brought up in my world. The good news for you is that this is still considered a 4 unit and you should qualify for residential financing. This is the same concept as a single family home not being considered a 2 -unit when an ADU is built behind it. Hope that helps. [Solicitation Removed by Moderators]
Hi Geoff, this is a great question and I don't think I have ever seen it brought up in my world. The good news for you is that this is still considered a 4 unit and you should qualify for residential financing. This is the same concept as a single family home not being considered a 2 -unit when an ADU is built behind it. Hope that helps.
>The good news for you is that this is still considered a 4 unit and you should qualify for residential financing.
It may not be commercial due to the ADU making it 5 units, but it does not qualify as a Fannie/Freddie (F/F) loan if the rules are followed. I suggest you look up the Fannie/Freddie rules regarding ADUs being added to multiplex properties.
I will add that I have seen the rule not allowing F/F on multiplex with ADU be ignored, but I also have heard of many cases of it not being ignored.
Safest approach is to go with the rule against F/F financing on a multiplex with ADU will be enforced and that F/F financing is not going to be available for this quad with an ADU.
Commercial financing could be the best financing available for this quad with ADU.
Hello Geoffrey! You are right where I want to be. Currently on the market for a good 4-plex to call home for house-hacking/ first investment property. Good luck with refinancing!