Struggling to get into multi-family financing with owner-occupancy, is it possible?

Question

Our bid was accepted on a multifamily - unfortunately my fiance got fired right after. Without her income we're stuck not qualifying. However - we do qualify for a commercial loan, since this building is a 4 unit multifamily. But our goal in about a year is to move into one of the units. We would normally grab an FHA which would solve all our issues - but we cant qualify using our income anymore.

This presents an issue - I cannot for the life of me find a commercial lender who is willing to let an owner move in, regardless of timeframe.

This wouldn't be such a big deal if we could, say, get a commerical loan now, then refinance in 1 year as FHA and owner occupy. The issue is that we'd have to switch between the LLC and our personal names when refinancing, and incur massive transfer taxes we'd hope to avoid (2% or so I think in NYC)

So I've been scratching my head and looking for lenders all week for one of three solutions I can think of:

1. A commercial loan (qualifying entirely on rent vs PITI) that lets us put it into our personal names(so we can refinance later to FHA).

2. A commercial loan that allows owner occupancy(either immediately, or later is fine).

3. A short term loan (under our personal names) we could use for a few months just to buy us time and get her income back, and then refinance to a traditional loan.

Does anyone know any lenders for 1 of the three options above?

Thanks!

Greg Scott · Answer

Does the commercial loan require you to send a rent roll from time to time?

If not, how is the lender going to know if you moved into one of the units?

Honestly, they probably won't care if the mortgage is getting paid. If you are worried, check the mortgage for the clause that specifies remedies.

Scott K. · Answer

I hear you, I don't know how they'd know. They don't require a rent roll. But still not trying to commit mortgage fraud! Seems there aren't any commercial loans that allow owner occupancy, BUT there are commercial loans that allow personal names - so whenever I want to move in I could more easily get traditional financing. That may be the solution I need.

Scott K. · Answer

Thanks for suggestions guys - found 2 lenders who will title the commercial loan in my personal name. This sort of solves everything! Just have to work the numbers to get the shortest PPP and refinance as traditional when the time comes to move in. Their companies are griffin funding and optimus capital group for anyone looking to do a similar move.

Mohammed Rahman · Answer

That’s a tough spot, but you’re thinking about it the right way. Here’s how lenders usually look at this:

Most true commercial loans don’t allow owner occupancy, because they’re underwritten on the property as a business, not as a residence.

And if you take title in an LLC now, you’re right — refinancing later into FHA in your personal names would trigger transfer taxes in NYC.

Your best shot is finding a lender who will do a DSCR-style loan in your personal names (your option #1). Some smaller local banks, credit unions, and even certain nationwide DSCR lenders will put it in personal names rather than forcing you into an LLC.

It’s not FHA, but it keeps the door open for you to refi later into FHA without incurring that transfer tax.

Option #3 — a short-term bridge loan or portfolio lender — is also worth exploring. There are private lenders in NYC who will do 6–12 month notes in your personal names.

It won’t be cheap, but it could buy you the year you need until your fiancée has verifiable income again, then you can roll into FHA.

I wouldn’t waste time chasing #2 (commercial + owner occupancy). Banks just aren’t structured for that — it creates compliance issues because it crosses the line between consumer and commercial lending.

If you want to move forward, I’d start with:

Local portfolio lenders and community banks in NYC — they have more flexibility putting the loan in personal names.

DSCR lenders that don’t require LLCs (there are a handful).

Private/bridge lenders if you’re open to higher rates short-term.

Jake Handler · Answer

This may be a stretch but have you considered consulting with the seller, or seller's realtor, with this?  Perhaps seller financing or some sort of similar alternate lending scenario may be a solution.  I would understand your hesitancy to tip your hand to the seller that you're having lending concerns, but as a last resort they may actually appreciate your willingness to be creative to buy the property.

Simmy Ahluwalia · Answer

@Scott K. - Solutions are available, but do you qualify first with enough liquidity (and credit) on hand to purchase the Quad?  Do you have an LLC set up?

Struggling to get into multi-family financing with owner-occupancy, is it possible?

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