Only 5% Down!
In a landmark policy change, Fannie Mae has announced that it will now accept 5% down payments for owner-occupied 2-, 3-, and 4-unit homes. This marks a significant reduction from the previous multifamily financing requirement of 15-25% down payments for duplexes, triplexes, and four-plexes.
This new policy is a boon for first-time homebuyers and investors alike. For first-time buyers, it opens up the possibility of owning a multifamily home, which can be a great way to generate rental income and offset mortgage payments. For investors, it makes it easier to acquire and grow their portfolios of multifamily properties.
The new policy also applies to standard purchases, no-cash-out refinances, HomeReady, and HomeStyle Renovation loans for owner-occupied transactions. This means that even buyers with lower credit scores or smaller down payments may be eligible for financing.
In addition, the maximum loan amount allowed for these 2-4 unit properties has been set at $1,396,800, making it possible to purchase larger and more expensive properties. And the elimination of the FHA self-sufficiency test for 3-4 unit properties means that buyers will face fewer hurdles when seeking pre-approval for these types of multifamily homes.
Overall, Fannie Mae’s new 5% down payment option for multifamily homes is a significant development that is making it easier for more people to own these types of properties. If you are considering buying a duplex, triplex, or fourplex, now is a great time to start exploring your options.
Why Buy a Small Multi-Family Home?
Buying a duplex, triplex, or fourplex is one of the best investments you can make as a first-time homeowner. These properties offer a number of advantages, including:
Higher-income potential: Duplexes, triplexes, and fourplexes allow you to generate income from multiple units, which can help you to qualify for a larger mortgage and purchase a more expensive home.
Reduced expenses: The rental income from the other units can help to offset your monthly mortgage payments, property taxes, and insurance costs. This can free up more of your income for other expenses or to save for the future.
Appreciation potential: Multi-family properties tend to appreciate in value at a faster rate than single-family homes. This is because there is a higher demand for rental properties, especially in desirable areas.
Here are some tips for buying a small multi-family home as a first-time homeowner:
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Do your research: Before you start shopping for a property, it is important to do your research and understand the local market. This will help you to identify the best neighborhoods and properties to invest in.
Get pre-approved for a mortgage: Once you have done your research, you should get pre-approved for a mortgage. This will give you an idea of how much money you can borrow and will make you a more attractive buyer to sellers.
Work with an experienced real estate agent: Working with an experienced real estate agent who specializes in multi-family properties can be very helpful. They can help you to find the right property and negotiate the best possible price.
Be prepared for challenges: Owning a rental property can be a lot of work, so it is important to be prepared for challenges. This may include dealing with maintenance issues, tenant problems, and evictions.
Despite the challenges, owning a duplex, triplex, or fourplex can be a very rewarding investment for first-time homeowners. These properties offer a number of advantages, and they can be a great way to build wealth over time.
Here are some specific examples of how buying a duplex, triplex, or fourplex can benefit first-time homeowners:
Easier loan qualification: When you apply for a mortgage, lenders will take into account your total income, including your rental income. This means that you may be able to qualify for a larger mortgage and purchase a more expensive home than you could if you were only buying a single-family home.
Reduced housing costs: The rental income from the other units in your duplex, triplex, or fourplex can help to offset your monthly mortgage payments, property taxes, and insurance costs. This can free up more of your income for other expenses or to save for the future.
Potential to live for free: If the rental income from your duplex, triplex, or fourplex is greater than your monthly housing costs, you may be able to live in one of the units for free. This can be a great way to save money on housing and build equity in your property.
If you are a first-time homeowner who is considering buying a rental property, a duplex, triplex, or fourplex is a great option to consider. These properties offer a number of advantages, and they can be a great way to invest in your future.
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