Conventional loan vs FHA for 4 plex?

Question

Is conventional loan available to first time home buyer for 4 plex ?  Which loan is best for 4 plex ? Conventional loan or FHA ?

If u guys have 4 plex or triplex sell let me know.

I am in colorado

Stephanie P. · Answer

Freddie Mac's Home Possible allows for 4 unit properties.  Mortgage insurance is much cheaper than FHA, so the little bit extra down will make a big difference in your monthly payment.

Only use FHA is you're tight on your down payment because the mortgage insurances (yes, insurances) can be steep.  There is up front MI and then monthly MI that doesn't go away regardless of the loan to value.  With FHA, you also have to take be concerned about the sustainability rule (where the mortgage has to be able to be covered by 75% of the rents).

Hope that helps

Stephanie

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Seth Wilcock · Answer

You can get a conventional loan on a 4-plex, but you'll need a minimum 20% down payment for Freddie Mac and a minimum 25% down for Fannie Mae. FHA allows for 3.5% down on a 4-unit Home. 0% down for VA financing.

If you qualify for the Freddie Mac Home Possible Mortgage (income restricted), you will need a minimum 15% down payment effective January 1st, 2021.

Nicole Heasley Beitenman · Answer

Depends on how much cash you have. If you can afford the larger down payment of a conventional loan and still have enough left over for repairs/maintenance, vacancy, and any other emergencies, go conventional. Otherwise, go FHA to hold onto your cash in case something goes wrong.

Stuart Grazier · Answer

@Sonam Jessica I'd recommend looking into both and just seeing what works best for your situation. I'm happy to help look into the pros and cons of each one. But, yes you can do either one.

Mark Leavitt · Answer

If you can get a conventional loan it’s a no-brainer to stay with a conventional! FHA is really just for those with bad credit or low money down. But it be harder to get into property at times with an FHA because of the rules and regulations on what they can loan on.

also if you are doing less than 20% down you will eventually have to refinance to get the pmi to drop off on an fha loan. Pmi is for the life of the loan. With rates where they are today you most likely will never want to refi, with a conventional pmi will drop off after 20%.

So for each property it’s different and each person. But I say always try to go conventional first and then use fha as a fall back.

Sonam Jessica · Answer

@Charles Carillo

Thank you Charles for informations

Really appreciated. Have a wonderful day

Charles Carillo · Answer

@Sonam Jessica

1-4 unit residential properties are considered residential properties so you will be able to utilize residential financing for them. The best loan depends on your specific situation, your estimated down payment etc.

Conventional loan vs FHA for 4 plex?

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