Other Low Money Down Loan Options Other Than FHA-5%?

15 Replies

Hi Guys,

Currently, I own an owner occupied duplex that I bought with FHA. I am looking to buy another multifamily, preferably a Fourplex, and reside in one of the units. I am currently talking to a mortgage broker but he cannot secure another FHA for the Fourplex. He advised it wouldn't make sense to refinance the current duplex (to get out of FHA so I can use it again) because my rate was so good (3.5%) and current rates have gone up. So, I'm stuck with the FHA I guess. What are my other financing options with low money down for multifamily (owner occupied)? I'm not a veteran and don't live in a rural area so those loan options wouldn't apply to me. I need a loan around 5% because I don't have much down payment. I tried looking at Homepath.com but they don't have any multifamily listings. I heard about Freddie Mac. Do they cover mutli's? And are there any other conventionals besides Freddie? Your assistance would be greatly appreciated.

I’m a lender at a big bank, we have a 3% down conventional product (not sure about overlays for multi-unit properties) that is very common at most banks, I assume you and your lender discussed this? 

How are you planning to obtain another owner-occupied loan for a 4plex when you already have one for the duplex? Doesn't your FHA loan require you to owner-occupy that property? You can't owner-occupy both of them.

Hi Brian @Brian Garrett . You only have to occupy an FHA for one year. In some cases Underwriting will approve another FHA if the property is a certain distance away or if it is bigger (to house a growing family). In some cases (although small), there are certain exceptions they will make.

Originally posted by @Jheanell R. :

Hi Brian @Brian Garrett. You only have to occupy an FHA for one year. In some cases Underwriting will approve another FHA if the property is a certain distance away or if it is bigger (to house a growing family). In some cases (although small), there are certain exceptions they will make.

Yes sorry I thought this was within the same year.

Originally posted by @Melvin List :

@Jheanell R. I would go HomePossible with 5% down.

 Melvin

Is Homepossible restricted to first time homebuyers or people who haven't owned properties in the last 3 years?  I'm still learning the product and from reading many of your previous posts, you've got it down.

www.freddiemac.com/learn/pdfs/mp/hp_glance.pdf

Stephanie

@Stephanie P. HomePossible you can't own an other property at closing.  HomeReady you can own other properties also.  The 3 year rule is for first time home buyer education.

@Jheanell R Broward County is not exempt.  You will need 15% for a 2 Unit

Originally posted by @Melvin List :

@Stephanie Potter HomePossible you can't own an other property at closing.  HomeReady you can own other properties also.  The 3 year rule is for first time home buyer education.

@Jheanell R Broward County is not exempt.  You will need 15% for a 2 Unit

So in @jheanell R's case, she won't be able to use HomePossible and keep the FHA property she owns right?

I'm no expert at it but someone did recently recommend the homeready loan to me as well. I've looked into it a little and it seems promising. May be the answer for you as well.

@Jheanell R. Hello. Can you provide an update. Did you decide to with the HomePossible loan? I’m looking into pre qualifying and the HomePossible loan is what the lender recommended.

HomeReady is 85% LTV on a 2-unit and 75% LTV on a 3-4 unit.

https://www.fanniemae.com/content/faq/homeready-fa...

@Jheanell R. , Even though you get hit on the rate if you refi your current FHA loan, that might be the "cost of doing business" in this case of pursuing additional multi-unit properties. The good news is, if there has been any appreciation and you're just doing a rate/term refi, you could drop PMI. Even if not, PMI will eventually fall off on the new loan.

Your mortgage broker/lender is probably well-intentioned, but is focused on the best loan "objectively," vs, in the context of your broader real estate investing goals.