Can I get a multi-family unit loan for 5-10% down?

21 Replies

Where can I find loans for multi family units at 5-10% down? I'm a first time invester with good credit and have a 4-plex I would really like to make on offer on...

If you are willing to be an owner occupant you can certainly find that. 4 units and under is a residential loan, not a commercial loan, so there are FHA, VA etc programs available. Homepath loans are available for some Fannie Mae foreclosures, both owner occ and investors- look at homepath.com, you'll find properties as well as links to the financing details. I'd call a few banks and/or mortgage brokers in your area and what they can do for you also

Thank you very much. Both my lenders told me I needed 25% down (Quicken and USAA). So, would a conventional loan fall under this category? Thanks for the response. I will look on homepath.com.

You need to speak with an investor savvy lender...you are talking to a robot in a cubicle at those big companies...find a local lender who knows the strategies.

...also, watch out on the FHA...the MIP (mortgage insurance protection) it stays on the loan forever, never drops off...that's going to effect your cash flow.

If you can live in one of the units, you should qualify for the 203k loan program.....just find a lender in your area that offers it. You'll do 3% down and can include repairs in the loan....best loan program ever for an investor/occupier. Happy Investing!

@Andy Luck ...it's 3.5%...and you are going to be stuck with MIP for the entire loan. I would save 5% and go conventional and at least PMI will drop off at 78%.

The lowest non-owner occupied rates I've heard of were 15%. These were by bank in Ohio doing deals only in Ohio. I have no concrete proof of these numbers, but there have been whispers.

Inexpensive ways into multi family deals. All are owner occupied.

0% Down:

NACA (https://www.naca.com)
VA Loan (http://benefits.va.gov/HOMELOANS/index.asp)

3.5% Down
VHA (http://portal.hud.gov/hudportal/HUD?src=/topics/buying_a_home)

3.5% AND Renovations
VHA 203k loan (http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/203kabou)

Originally posted by @Jean Bolger :
If you are willing to be an owner occupant you can certainly find that. 4 units and under is a residential loan, not a commercial loan, so there are FHA, VA etc programs available. Homepath loans are available for some Fannie Mae foreclosures, both owner occ and investors- look at homepath.com, you'll find properties as well as links to the financing details. I'd call a few banks and/or mortgage brokers in your area and what they can do for you also

Jean - My experience with the Homepath lenders is 25% down for non-owner occupied buildings. Am I asking the wrong Homepath lenders?

@Aaron Montague - I thought they had straight 10% investor loans, but a quick google showed all the references to that being older, like from 2011, so I guess it's changed. Here's something more current that's a bit greek to me but seems to say 10% down for an investment SFR, 20% for a duplex and 25% for 3-4 OR if you have more than four mortgages.

It looks like the 5% still works for owner occupied multis though...

I will occupy the unit for at least the first year. No reason not to get the best rates possible etc. This is a must for me. Plus it will be cheaper than our current rent (paying rent to ourselves-the rate is still lower).

@John H. ...yes, what you say above is true, However, you need to evaluate the property as if you are NOT moving into one side. The numbers have to make sense, unless you want to live their the rest of your life and just have a mortgage helper living next door.

Does anyone every think there will be a day when investors stop calling a 4-plex a multi-family property? That's what complicates the financing issues, looking in the wrong area. Owner occupied attached single family dwellings are in the same loan programs as single family, the down payment for 4 will be 25%, it's been a very long time since I've seen 5% down on a duplex, 10% I'd guess would be the minimum any mortgage banker would take on, mortgage banker meaning wholesale secondary market. To simplify, we call them duplex, triplex and four-plexs all being single family under HUD and lending constraints, multi-family begins at 5 units and up.

As James pointed out, it needs to cash flow after you move out. You need to stay in there at least one year for the owner occupied status.

I have to apologize - I am often tired when posting here - so yes 3.5% plus 1.75% MIP...and an interest rate around 4 or sub-4%... still the cheapest deal an investor is ever going to get. I'm not a mortgage person nor do I wish to become one. Up until 2013, you could always refinance once you had 22% equity in the property and recover the MIP that was pre-paid. Those rules have now changed...so what, if you qualify for the loan it's a true 30-year loan and at current rates....a huge bargain over time. Plus, you can roll any upgrades or repairs into the loan and still only 3.5% down out of pocket. You can't get a better deal than that unless you find someone who bought one of these and is either stuck and wants out or is older & retiring and is willing to carry a note back on the property. I've done quite a few owner financed deals on duplexs and tri's over the years....all were good deals for me.

Here he is buying a 4-plex or quad - if this is his first investment, it's a great idea for him to occupy one unit and rent the others. Are the 2-bedroom units or what are they? If they are and you have the parking, turn a couple of the units into shared housing.....it will boost your net rents and you won't ever have any vacancy. I love shared housing and our model turns losers in winners every day here in Atlanta.

I know this is a super old post.  But im interested in purchasing a home to live in with just my family and because it has three kitchens its being considered a multi family home and bcause of that is requiring a 25% down payment.  We only have enough for 10%.  Is there anything at all we can do?  I know this is a site for people buying rental investment properties but dont know where elsr to look for answers.  If anyone knows of a way around this that would be great!

Originally posted by @Roberta Pepper :

I know this is a super old post.  But im interested in purchasing a home to live in with just my family and because it has three kitchens its being considered a multi family home and bcause of that is requiring a 25% down payment.  We only have enough for 10%.  Is there anything at all we can do?  I know this is a site for people buying rental investment properties but dont know where elsr to look for answers.  If anyone knows of a way around this that would be great!

Do you already have an FHA loan? Are you a veteran? The FHA and VA loans are probably the easiest way to get low down payment on an owner occupied 2-4 unit property.

nope not a veteran, just a regular old married citizen with four little kids. I will check on the FHA idea. Thanks!

its too expensive to be considered for FHA loan ;(

@John H.

Welcome to BP.

Since you will be occupying a unit, my suggestion is go with;

FHA 203K

3.5% Down

PMI until you reach 20%

Fixed for 30 years

Interest rates are between 4% - 5% (depending on your credit)

The idea is to use opm as much as you can.

Hope it helps.

James Syed, Real Estate Agent in IL (#471018522)

its a tri level house with the main floor kitchen, then it has another kitchen on bottom level and a third in apartment above garage.  We were hoping to use apartment for my husband's office.  It's in Catoosa County GA.  Its zoned as single family I believe but appraiser said due to kitchens we would need the 25% down which for us is impossible.  And our intentions for it don't play into the equation at all.  I'm super upset, it looks like there is no way around it.