15-20% down conventional requirement for multi-family?

Question

Good morning, I'm working on buying a second home (currently 2-unit), and renting out the single family house I purchased last year. The mortgage broker found that just recently, maybe around the end of March '23, that you can no longer put only 5% down on a multi-family using a conventional mortgage, and I'm required to use FHA, which also requires having a renter in place before I moved, letter of explanation, etc.

Is anyone else running into this? I'm planning to occupy the entire house, both units, so I wonder if I could buy it as a single family? Thank you

Is anyone else running into this?  I'm planning to occupy the entire house, both units, so I wonder if I could buy it as a single family?  Thank you

JooYung Choi · Answer

I have access to a 5% down conventional loan on a multifamily property in my local market (property must fit their criteria). My advice is to call around as many lenders and community banks as you can to see if they offer special programs. There won't be many, but once you find one, your investing trajectory will change!

Tanner Pile · Answer

@Jamie Cianfarani

You can buy 2-units as a SFH but it will need to be zoned as a SFH and the county assesor must have it listed as a SFH.

Why would you look to buy a multi-family property and convert it into a SFH?

Account Closed · Answer

The only way you can still put 5% down on a multi-family is if you are using Freddie Mac Home Possible. Otherwise, expect 15% on a 2-fam and 20% on a 3 or 4-fam.

Ryan Thomson · Answer

@Jamie Cianfarani these are the rules right now. In Colorado Springs, If the assessor lists it as 2 units or there are two electrical meters it is considered two units and there is no way around the 2-unit loan rule, even if you occupy both units.

What are your hesitations with going FHA? 5% down is a great deal for the extra work of making a letter and finding a renter.

Jamie Cianfarani · Answer

I didn't mention that I plan on making the new house the primary residence, thinking I would only need 5% down.  Understand it is different for multi-family but not new requirement

Caroline Gerardo · Answer

These are not new conventional loan requirements.

Lease and deposit check requirement at closing have existed since 2019.

15-20% down conventional requirement for multi-family?

Most Popular Reply