Is 3%-5% multi family HH dead ?

Question

Hello BP!

I have just read the guidelines for Freddie and Fannie. My question is can you no longer use those loans for a 2-4 unit house hack. Also what other types of loans would be ideal for a owner occupied 2-4 unit? Any low downpayment options would help greatly.

I currently have under contract a illegal duplex so I was trying to live in one while I fix it up. The county records show its a single family. One AC, washer dryer hookup, one electric bill ( 2 meters though ) and 1 water meter. The appraiser originally ordered it to be a single family but now wants to run it as multi. We are trying to fight that as it’s a mother in law suite not a duplex hence lower downpayment ? Any tips and tricks? I have my lender working on it.

Cheers

-Rj

Also the land is zoned multi family.

RJ Dixon · Answer

@Andrew Postell

Thank you for the information I appreciate it. We make to much money for the home possible. I tried to fight with a appraiser on it being a a single family but no luck. It happens that the seller was motivated and we both worked out a deal. Once again thank you and have a merry Christmas!

Andrew Postell · Answer

@RJ Dixon Freddie Mac Home Possible program is the program that allows you to put down 5% on a multi-family property.  You do have to income qualify for the program but it is still active and one that most lenders will have access to.  You can even use THIS LINK to see if what the income limit is for the property you are buying will be for the program.

Now, if this is a single-family home with a mother-in-law suite, then that means you can do 3% down in the same program. The PMI is also reduced in this program so it is certainly something worth exploring.Hope this helps.

RJ Dixon · Answer

@Andrew Postell

I know I can buy multi with Freddie/Fannie but I’m trying to only put 5% down as owner occupied. I was having trouble getting that product but I don’t think they have it. I could be wrong. The land is zoned multi but the home itself is in the county records as a single family with a mother in law. The appraiser didn’t see it that way. He wanted to appraise it as a duplex. My plan was to owner occupy as a single family because I know you can go 5% conventional and only live in it for a year. While living in the property I would do what needs to be done to make it a legal duplex. If that makes sense.

Andrew Postell · Answer

@RJ Dixon wherever you read those "guidelines" were 100% incorrect.  You can certainly use Fannie/Freddie to buy multifamily properties.  Now, I'm not sure what you meant by "illegal" duplex but I'll assume zoning?  A "mother-in-law" suite is something that is usually detached from the house, and less than 400 square feet in size.  Your local zoning will make the determination here...so while the "lender is working on it"..they won't have anything to do with your local zoning requirements.  If your local city/county regulations say the house is not legal...your only option is to do a renovation loan making the property legally conforming to local zoning requirements.  And sorry that if some of this came across strongly but a lender should know these answers and should have advised you on this already...so if they didn't, that kind of makes me irritated. Certainly here to help in any way that I can.

RJ Dixon · Answer

@Latasha Griffin

Yes I have used FHA before. I use them for a fixer property. I usually refi so I can keep using the FHA. I might have to use it but what other low owner occupied loans can I use?

Cheers

Latasha Griffin · Answer

@RJ Dixon you should consider an FHA 203k which allows you to finance the purchase and the renovation budget into one loan with 3.5% down. 1-4 unit properties qualify. Youd have to live in the property for at least 12 months after the renovation is complete before refinancing or moving out. I've done a lot of research on this loan product as I'm going to use one on a 4 unit once I find one. Feel free to reach out to me to discuss. This loan has quite a bit of complexity but is a great way to get into a profitable house hack.