5% Down 2-4 unit Financing

[Landon Hoon]

Yesterday we received amazing news around 2-4 unit financing for house hackers!

This change will take place on November 18th and allow for clients buying a 2-4 unit owner occupied property to only put 5% down.

Main take aways:

• 5% down on 2-4 units
• No income limits
• No self-sufficiency test
• Primary residence required
• No first time buyer requirement
• Minimum credit score: 620+ and must also pass through automated underwriting system
• Reserve requirement: Based off automated underwriting findings
• Maximum Debt to income ratio: Based off of automated underwriting findings (expecting this to be 45%-50%)
• Loan limits:
• 2-unit = 929,850
• 3-unit = $1,123,900
• 4-unit = $1,396,800

Refinances:

• Clients can now also refinance on a conventional mortgage of a 2-4 unit with only 5% equity. This is a great solution for anyone looking to refinance out of an FHA mortgage.

Definition of limited cash out refinance by Fannie Mae:

• Client is not required to take any cash out but the maximum they can take out is the lessor of 1% of the loan amount or $2,000.

Accessory Dwelling Units:

• Fannie Mae does not currently allow for the use of ADU's on 2-4 units. We do have work arounds for this and you can reach out to me directly if you have a property that has an ADU for guidance.

Guideline below:

• https://singlefamily.fanniemae.com/media/36841/display

Please DM with any questions. 

[Robin Simon]

How is this great news? Government subsidizing people to overleverage (95% LTV) in an extremely volatile and risky market. Some things are never learned - this pushes us further to another economic crisis