Has anyone used a MyCommunity Mortgage (Fannie Mae), or a Home Possible Mortgage (Freddie Mac) to purchase a 2-4 unit owner-occupied property?
Reading the guidelines, it seems like it's structured exactly like FHA loans in that there are low down payments (3%-5%), and you can use a portion of expected gross rents towards qualifying income. I haven't found any information about people actually doing this, but from reading the guidelines it seems to be doable.
For me, there seems to be two distinct advantages of MyCommunity and Home Possible. The first is that the FHA alternatives are going to cost less than FHA loans. The second is that the maximum loan limits are much higher with MyCommunity and Home Possible.
In my area, the difference in fourplexes priced between 500,000 and 700,000 is significant. 700,000+ would buy me a very nice building in a luxury community; a property I would desire to live in. 550,000 or less would buy me a property in areas that I don't want to live in. Through the FHA, I would have to buy a property on the lower end of the spectrum based on the maximum loan amounts for my city. Fannie and Freddie's alternatives have limits up to 800,000 for my city which would be more than enough to buy a property that I would actually want to live in.
Assuming these loans are underwritten similarly, and based on what I have available to put down and keep for reserves, I would be able to purchase a property above the 800,000 limit. As long as current and future rents on the property are near their market rate, it will be sufficient enough to qualify for the loan even though I may only be able to use 65% instead of 75% of rents.
I know that I can buy a very nice, desirable place for around 700,000 in my area. They also have extremely healthy cash flows as they are luxury communities with A-class tenants. Luxury communities in my city are very scarce and these buildings don't come up for sale often. Rents are very high and very stable. Occupancy is minimal. I just missed 2 that sold last month for 700k and 713k.
Can someone help me out? Has anyone used the alternatives to FHA loans for owner-occupied multi-unit buildings?