How to finance a 4 plex unit just starting out.

Question

Hello BP community, I am working with a realtor who has found me a brand new 4 plex unit for 472,000. Each unit rents out about 1050 a month. I attempted to get an FHA loan  with putting 3.5 percent down however I was told by my bank (Navy Federal) that FHA loans only cover SFR and Multifamily units and not triplex or 4 plexs. Is there any other type of loans out there that I could apply for financing? Even if I would intially live in one of the units? I just started an LLC, should I try and get a business loan under the LLC which has no credit or just do it under my name. My credit score is 780 as well. Would a regular conventional loan be good?

David Espinosa · Answer

My banker didn't know that you could either and after they looked into it, turns out I was right. They asked for a longer close period to work it out as they haven't done one before but all worked out and should get a clear to close any day now. It's a four-plex. Hope this helps!

David Espinosa

Henry Kaldenbaugh · Answer

In a nutshell, You must live in one of the units and the net rental income must exceed the mortgage payment.

Justin Kane · Answer

Id like to learn more about this FHA self sufficiency test

Jordan Moorhead · Answer

@Ethen Royal talk to a different bank. Your bank is flat out wrong unless there’s something that this specific property has that precludes it from FHA financing

Ethen Royal · Answer

Thank you for the information, do you think I should try and do the fannie mae loan under my new LLC or under my personal name since thats where all of my credit is established or does it even matter as long as I  have the amount for the down payment? Thanks again

Chris Mason · Answer

FHA will lend on a 3-4 unit property (barring overlays), but it must pass the "FHA Self Sufficiency Test." Here in Oakland and the SF Bay Area, few of them do.

Check out one of the many threads on biggerpockets.com on Home Possible. Here's one.

How to finance a 4 plex unit just starting out.

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