5% Down on conventional loan on Multi-family offered?

Northern New Jersey, NJ · Member since 2014 · 53 posts · 14 votes

6y

I purchased a multi family last year with 5% conventional. From what I read, that is harder these days.

Member since 2018 · 4 posts · 4 votes

6y

Fannie Mae and Freddie Mac loans are 75% loan to value on 3-4 units. FHA can go as little as 3.5% for owner occupied 3-4 units.

1 Reply

Marc RiceBusiness Member

Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes

6y

We closed with a 5% conventional owner occupied, my partner brought the W2 and my income was viewed as 0 because I did not have 2 years of 1099 income. This was a 5% conventional product with monthly PMI that drops off at 20%. I know of a few lenders in Ohio who still service these loans, although I know they did tighten the income limits so that the borrowers gross annual income can't be over about $52-55k. PM me if you have any questions!

[email protected]614-363-2787

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Albert Bui

Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes

6y

Originally posted by @Brad Hammond:

My lenders told me the Fanny/Freddy minimum is now 15% (I think it recently changed. You could always go FHA if that ends up falling through.

15% down yes on owner occupied conventional duplex or 2 unit property. This is for regular conventional guidelines.

Fannie or Freddie have a lot of niche programs like home one, home ready, home possible, and others that have different guidelines such as 5% down on 2-4 unit owner occ properties.

1 Reply

Albert Bui

Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes

4y

Originally posted by @Jason Hines:

I am going through this right now. Just had an offer accepted fortunately. It's just for a two unit, but I have had 2 brokers and several lenders say that I needed 15% down for conventional. Fortunately, I found one without PMI, so I went with that.

The standard conventional guidelines for owner occupied 2 unit property is 15% down so is true if thats what they intended to use with their offer. The other options are FHA or VA which are 0-3.5% down payment if the buyer/borrower can qualify. Home possible conventional used to be 5% down on 2-4 unit properties but recently in the last 1 year they gimped that program so that it now it no longer offers lower down on 2-4 units anymore.

Hope this deal went well Jason.

2 Reply

Albert Bui

Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes

4y

Originally posted by @Brad Hammond:

My lenders told me the Fanny/Freddy minimum is now 15% (I think it recently changed. You could always go FHA if that ends up falling through.

HI Brad it was always 15% down on duplexes for owner occupied and 20% down on 3-4 unit owner occupied Freddie Mac conventional (vs 25% fannie mae for owner occ 3-4 unit).

The only program that allowed 5% down on 2-4 unit owner occupied was freddie home possible which was a niche program within freddie's attache of products. However, recently Freddie has gimped their HP program and now no longer offers 5% down payment on 2-4 unit owner occupied any more plus on top of that there are tough income limits that would pretty much preclude you from any 2-4 units on the west or east coasts (unless you stole it via deep discount wholesale deal). The reason is because the price ranges on west & east coasts are so high that its almost impossible to qualify with the income limits that the program requires you to stay under (80% of AMI or area median income).

Hope that helps.

1 Reply

Tony P.

Lender · Kirkland, WA · Member since 2018 · 19 posts · 20 votes

4y

Originally posted by @Albert Bui:

Originally posted by @Brad Hammond:

My lenders told me the Fanny/Freddy minimum is now 15% (I think it recently changed. You could always go FHA if that ends up falling through.

HI Brad it was always 15% down on duplexes for owner occupied and 20% down on 3-4 unit owner occupied Freddie Mac conventional (vs 25% fannie mae for owner occ 3-4 unit).

The only program that allowed 5% down on 2-4 unit owner occupied was freddie home possible which was a niche program within freddie's attache of products. However, recently Freddie has gimped their HP program and now no longer offers 5% down payment on 2-4 unit owner occupied any more plus on top of that there are tough income limits that would pretty much preclude you from any 2-4 units on the west or east coasts (unless you stole it via deep discount wholesale deal). The reason is because the price ranges on west & east coasts are so high that its almost impossible to qualify with the income limits that the program requires you to stay under (80% of AMI or area median income).

Hope that helps.

Actually, you can still take advantage of 95% LTV using Freddie's Home Possible program.

See their latest agency guidance on this here: https://guide.freddiemac.com/a...

0 Reply

Albert Bui

Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes

4y

Originally posted by @Tony P.:

Originally posted by @Albert Bui:

Originally posted by @Brad Hammond:

My lenders told me the Fanny/Freddy minimum is now 15% (I think it recently changed. You could always go FHA if that ends up falling through.

HI Brad it was always 15% down on duplexes for owner occupied and 20% down on 3-4 unit owner occupied Freddie Mac conventional (vs 25% fannie mae for owner occ 3-4 unit).

The only program that allowed 5% down on 2-4 unit owner occupied was freddie home possible which was a niche program within freddie's attache of products. However, recently Freddie has gimped their HP program and now no longer offers 5% down payment on 2-4 unit owner occupied any more plus on top of that there are tough income limits that would pretty much preclude you from any 2-4 units on the west or east coasts (unless you stole it via deep discount wholesale deal). The reason is because the price ranges on west & east coasts are so high that its almost impossible to qualify with the income limits that the program requires you to stay under (80% of AMI or area median income).

Hope that helps.

Actually, you can still take advantage of 95% LTV using Freddie's Home Possible program.

See their latest agency guidance on this here: https://guide.freddiemac.com/a...

Yeah for 1 unit up to 95-97% plus there are income limits and requirement to stay under 80% of AMI.

Prior Freddie HP could be used with no income limits in opportunity zone and certain zip codes allowing people of any income to buy owner occupied 2-4 unit property with 5% down. In 2019 they gimped it.

1 Reply

Tony Montano

Member since 2021 · 11 posts · 4 votes

4y

Quote from @Jason Hines:

I am going through this right now. Just had an offer accepted fortunately. It's just for a two unit, but I have had 2 brokers and several lenders say that I needed 15% down for conventional. Fortunately, I found one without PMI, so I went with that.

Willing to share who you went with?

4 Reply

Dana Nino

Member since 2021 · 2 posts · 0 votes

3y

Is anyone aware of multi family loans available with 5% or less down that will NOT be owner occupied? I have been wanting to buy a bldg for YEARS but I’m in So Cal and the cheapest bldg that can get decent rents are all well over $1m - but putting several hundred thousand down is always my roadblock. If I could find a lender that would do 5% I’d buy immediately. Credit score 750. If you know of any such them my way!

0 Reply

Greg Boucher

Member since 2023 · 3 posts · 0 votes

3y

Quote from @Jacqueline Nguyen:

Hi all! I've been reading a lot of forums on BP and saw many people say that 5% down conventional loans on a owner occupied fourplex is no longer existent. 3 out of 4 lenders I've reached out to also told me the same thing such that the lowest % down is 5% even if owner occupied for a multi-family. However, I spoke to one lender that said I was eligible for 5% down conventional loan OO fourplex because its still considered primary.

I'm feeling really uneasy about this and was hoping I can get some assistance! 3 lenders suggested I go to FHA route if I want little down but this ONE lender is saying I'm good for the conventional. Is this a red flag? I prefer a conventional loan on this fourplex but something isn't feeling right. Is the 5% conventional down on multifamily a rule across the board that all lenders need to follow or is it different for each lender? Please assist!

Well. Been a while. Now it's changed. Starting Nov. 18, 2023, Fannie Mae will be updating the maximum LTV/CLTV limits for 2-4 Unit Primary Residence properties to allow 95% LTV/CLTVs.

0 Reply

Kyle HendricksPro Member

Lender · Member since 2021 · 170 posts · 74 votes

3y

Conventional will now allow 5% down on 2-4 units if you owner occupy starting November 18, 2023!

Massive news. 😊

[email protected]253-355-0247

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5% Down on conventional loan on Multi-family offered?

5% Down on conventional loan on Multi-family offered?

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