Removal of FHA Self Sufficiency Test?

Question

I read an article recently about how Fannie Mae was increasing the LTV for 2-4 multifamily to 95% and the self-sufficiency rule would be eliminated. Is this true? I didn't see anything about this in the updated selling guide from Fannie Mae, and I can't find any other news sources reporting this info.

https://themortgagereports.com/107690/fannie-mae-introduces-...

Andrew Postell · Answer

@Kyle MacDonald there is no "self-sufficiency" rule with conventional lending. That's what makes this downpayment change so significant. FHA has it, conventional doesn't. Read this HERE for a some other differences.

Brittany Minocchi · Answer

It is true that Fannie Mae is increasing LTV to 95% for owner occupied 2-4 unit properties, this goes into effect mid-November. Note that it's for conventional loans, not FHA, so FHA still has the self-sufficiency test for 3-4 units. There hasn't been any info on whether or not it'll apply to this new change with conventional.

Russell Brazil · Answer

Self sufficientcy test is for FHA loans, not conventional loans.

Benjamin Sulka · Answer

@Kyle MacDonald

Like others have said, the self sufficiency test is for 3.5% down FHA loans on 3-4 unit properties.

There is no such test for any conventional loans. However, the two are similar in that you will have to pay PMI due to the low down payment. FHA loans have PMI for the life of the loan unless you refi. Conventional on the other hand has PMI until your reach 80% LTV typically.

Best of luck in pursuing your strategy!

Removal of FHA Self Sufficiency Test?

Removal of FHA Self Sufficiency Test?

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