3% Down Conventional Loan

6 Replies

My wife and I are considering taking advantage of a 3% down conventional loan to buy a multi family. However, it’s my understanding that you need to move in with so many days after taking possession of the property.

Does anybody know the penalty if you don't move in on time or ever, as long as the mortgage is being paid on time?

Who would generally check into this to ensure the owner has in fact moved into the property?

What unit count are you looking at? Fannie Mae loans for larger deals are sub 3% in a lot of cases right now and you don't have to live at the property. I would talk directly with a lender that can help you understand the best fit for your situation & goals.

Updated 3 days ago

Edit: Read the original post wrong and thought you were talking interest rates. We are seeing 25-35% down on conventional product with Fannie & Freddie plus 6-12 months of P&I to be escrowed at purchase as additional lender required reserves.

1) 3% down conventional loans are Only for single family homes, not 2-4 units. 4 units are 20-25% down  

2) if you don’t move in, without verifiable cause, it’s Mtg fraud on an owner occupied loan. 

Originally posted by @Hayden Harrington :

What unit count are you looking at? Fannie Mae loans for larger deals are sub 3% in a lot of cases right now and you don't have to live at the property. I would talk directly with a lender that can help you understand the best fit for your situation & goals. 

I don't know of any sub 3% loans for rental properties ... regardless of the number of units. In addition, if you get a conventional loan which could be 3.5% down (FHA) you could purchase up to 4 units using that Product. Remember that there will also be monthly PMI on the loan for the life of the loan and you will also be required to pay UFMI which is 1.75% of purchase as well which is non refundable unless you refi into another FHA product. Essentially, you can get in for 5.25% + closing costs.

If it's FHA or conventional and you don't move in, that is simply mortgage fraud so probably best to owner occupy for 6-12 months and play it safe.

Hope this helped.