Can I put 5% down on two family home?

Question

Hello, I am looking at a two family home in Essex County NJ.  I am planning on making an offer at $350,000.  I will have a cosigner on the property who will not be living in the home, however I will occupy one of the units and rent out the other unit to a tenant that is already there with a M/M lease for 1500$ per month.

My question is, is it possible to get approved for an owner ( not cosigner)  occupied multifamily home and only put 5% down?

I have spoken with only one person regarding this and they have mentioned that I may need to put 10% down to be approved.

BP, please help!

Account Closed · Answer

@Chris Cozzens there are different variations of the 203k loan program...if the property didn't need much in repairs (less than $35K I believe) you could get the 'streamline' version of the loan.

Like @Stephanie Irto said, this is an FHA loan and you could put as little as 3.5% down since you're owner occupying it.

I'd look into it and see if it fits your needs!

Account Closed · Answer

Hi Chris,

Happy Monday! Have you looked into the 203k loan program, since you'll be occupying the property?

Stephanie Medellin · Answer

@Chris Cozzens

Stephanie Medellin · Answer

My apologies - I totally overlooked that when I wrote my response.  Yes 25% down on a multifamily with a non-occupant co-borrower is correct.

http://hudgov.prod.parature.com/link/portal/57345/57355/Article/8477/Does-FHA-allow-non-occupying-co-borrowers-on-a-multi-unit-property

Chris Cozzens · Answer

Hey @Stephanie Irto  The loan originator I was speaking with today spoke with an FHA underwriter.  I guess since the house is a multifamily and I have a co-signer (non occupying ) that I would need to put 25% down.  This doesn't seem right to me, because if I put 25% down, why would i need FHA lol.

Not sure if it makes a difference but i have 760+ credit and my cosigner is 740+

Stephanie Medellin · Answer

The only reason you would need 10% down for FHA is if your FICO score is between 500 - 579.

Stephanie Medellin · Answer

If you don't own any other property you might want to try a Freddie Mac Home Possible loan.  They will allow 5% on a duplex, but I don't believe you can have a non-occupant co-borrower.

Of course FHA loans allow 3.5% down on 1-4 units too.

Chris Cozzens · Answer

@Troy Beebe thanks for the tip  The house I am looking at will not need much work ( if any ) Would the 203k loan program still be a good fit?