Has anyone heard of increased down requirements on a duplex?

Question

Has anyone heard of increased down payment requirements on a duplex? Our lenders assistant failed to mention to him that the property we are buying is a duplex. We were heading to underwriting when he received the appraisal and discovered the information. Now they are saying Freddie Mac and Fannie Mae require 25% down on a duplex. I can't find anything on either of their sites to support that.

Wayne Brooks · Answer

Fannie

Owner occupied duplex...15%

Investment duplex....25%

It has been that way forever.

Google up Fannie Mae Eligibility Matrix, or something similar

Wayne Brooks · Answer

@Shawna Petersen @Jason WrayHere is the link to the Fannie Eligibility Mateix

https://singlefamily.fanniemae...

Corina Eufinger · Answer

It's not unusual now days for duplexes to be 25% or higher for a d.p. unless it's special financing (FHA,V.A.).  It's an unfortunate consequence of the COVID recession. You will also find their credit qualification tighter as well.  Even the banks and lenders I normally consider "competitive" are edging up to 30%.  There is a light at the end of the tunnel though because lenders and banks can't sustain this model very long.  Interest rates are incredibly low because of the FED which of course tightens the lenders books (I know..."woe is me the bank isn't making money...") so eventually to start making some money (even if its through origination fees, etc) banks will lower some requirements to be able to lend again.

On a related note and as an example of why this isn't sustainable.  For the first time in 10 years, my bank decreased (rather than increased like it does annually) it's APY on savings. It actually went down by quite a bit.  It is most definitely a result of the FED interest rates, tightening of loan requirements, and less cash flow for the banks.

Calvin Ozanick · Answer

Banks are tightening up SIGNIFICANTLY at this time. Some banks in the Janesville market here are even requiring 30% down for investment properties. Be sure you speak to local lenders about the rates and terms offered on investment deals in this crazy market. Great time to shop lenders.

Jason Wray · Answer

Unfortunately that is from my website.  I cannot solicit in this forum but I would be happy to send you an e-mail?  Message me. feel free to visit my profile for info.

Shawna Petersen · Answer

@Jason Wray do you have the link handy for that side? I think they’ve had us set up for conventional

Jason Wray · Answer

@Shawna Petersen @Wayne Brooks

That link is only for (1) program. Just keep in mind that link is for the Fannie renovation program only.  That is not the Fannie/Freddie conventional guideline matrix.  Home possible is not the same and not limited:

Loan-to-Value (LTV) Ratios

Property TypeMaximum LTV/ TLTV/ HTLTV(Non-Super Conforming)Maximum LTV/ TLTV/ HTLTV(Super Conforming)Fixed Rate Mortgages1 Unit97%*95%**2 Unit95%85%3 and 4 Unit95%85%ARMs1 Unit95%95%2 Unit95%85%3 and 4 Unit75%75%Manufactured HomesSee Chapter 5703•*A TLTV ratio exceeding 97% and up to 105% is permitted when secondary financing is an Affordable Second.•**A TLTV ratio exceeding 95% and up to 105% is permitted when secondary financing is an Affordable Second.

Property Type

Maximum LTV/ TLTV/ HTLTV(Non-Super Conforming)

Maximum LTV/ TLTV/ HTLTV

(Non-Super Conforming)

Maximum LTV/ TLTV/ HTLTV(Super Conforming)

Maximum LTV/ TLTV/ HTLTV

(Super Conforming)

Fixed Rate Mortgages

1 Unit

97%*

95%**

2 Unit

95%

85%

3 and 4 Unit

95%

85%

ARMs

1 Unit

95%

2 Unit

95%

85%

3 and 4 Unit

75%

Manufactured Homes

See Chapter 5703

•*A TLTV ratio exceeding 97% and up to 105% is permitted when secondary financing is an Affordable Second.

•**A TLTV ratio exceeding 95% and up to 105% is permitted when secondary financing is an Affordable Second.

Property Options

•1-4 Units

Wayne & Shawna this is coming from a banker....check out my profile!

Shawna Petersen · Answer

@Wayne Brooks thank you thank you!!! This is much more detailed than the one I found.

Jason Wray · Answer

@Shawna Petersen  If you are buying a primary residence it can be a duplex and you are only required to put down the minimum per program.  For example Fannie and Freddie will allows 5% down with monthly PMI.  Some lenders have overlays and require more to meet broker guidelines.  Have you shopped around for a better rate/term and DP?

Shawna Petersen · Answer

I have looked at both Fannie and Freddie both say 20%...unless I’m looking in all the wrong places.

Has anyone heard of increased down requirements on a duplex?

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