Can you House Hack multi-family with Navy Federals 0% down loans?

[Joshua Lyon]

Ive been looking at different financing options for a quad plex. I'm a little confused by Navy Federal Credit Unions Terms and Conditions on their website. Under all their mortgage options it says minimum down payment for two-family properties is 20-25%. At the same time the loan advertises 0% down and no PMI. Doesn't say anything about triplexes or quadplexes. Does this mean you can't take advantage of the 0% down for multi-family homes even if you house hack it? Does anybody have any experience using NFCU's Military Choice or Homebuyers Choice loans?

[Thomas Franklin]

Joshua Lyon There appears to be some confusion regarding definitions. A SFR is defined as a Single Family Residence. A MFR is a Multifamily Residence such as a Duplex, TriPlex, a Four Plex, or a property housing five plus units. If your intention is to "House Hack," you should know the Lender's Occupancy Criteria. For example, those that use FHA Financing are required, to live in one of the units, for a minimum of one year before they can move out an rent the unit, to a tenant.

I invite you to consider the following. If you closed personally, you will not have Asset Protection, in the form of closing in the name of a LLC. What happens if one of your tenants has a slip and fall, on your property, or something else happens to them? You are on the hook and can be personally sued, for everything you own. Some people will say, "Take out a quality Insurance Policy and you will be protected." Ambulance chasing attorneys know their way around and can legally navigate around Insurance Policies. Another downside is you loose on the advantages, of the Federal Tax Code, by not closing in the name of a LLC.

If you want to close in the name of a LLC, Mortgage Lenders will offer you Commercial Loan Terms (25-30% down, a 15-25 year amortization, and a ballon due in 5-7 years). This is what I am encountering, in the current Mortgage Industry.

If you think you will go FHA, Conventional, 203k, etc. and then Quit Claim the property, to a LLC, or a Land Trust you run the risk of the lender discovering a Title Transfer occurred and activating the "Acceleration Clause" or "Due on Sale Clause" that requires the loan to be paid in full, within 'x' number of days. These clauses are contained, in all Promissory Notes nowadays.

Many Realtors and/ or Mortgage Brokers will not tell you this information. Many, but not ALL are only focused on the commissions he/ she will earn and not focused, on your best interests. You many be asking yourself what can I do? Locate a Motivated Seller that will consider Seller Financing. You may have to put more money down (10-15%), but you can close, in a LLC, with no worries about banks. I have a lengthy Legal Opinion, from my seasoned Legal Team regarding this matter.