Financing Options for high downpayment/low income

[John Acklen]

Hi all! My wife and I are moving from California back home to the Midwest where I'm from. I've been wanting to start investing in multi-unit properties for a while, but it's been too expensive for us to get started out here. What are some loan or financing options for us to purchase a multi-unit property? We have a decent amount saved to put as a down payment, but since we'd be starting new jobs/careers so our income won't be strong. Thanks in advance for any advice!

[Stephanie P.]

@John Acklen

Some of the information on this thread needs to be clarified.

Here's a path forward.

If you're moving to the midwest and can find a property to move into that has up to 4 units, you should be able to use FHA as your financing vehicle. If you stay in the same industry and go W2 job to W2 job, the underwriter will be able to use your new job plus projected rents for income as long as your previous job has a 2 year history.

That said and to answer your question about units correctly, you would need to live in one of the units to have it "owner occupied" and qualify for FHA or Freddie Mac's Home Possible program (Freddie has additional hoops to jump through than FHA). It would NOT be considered a commercial loan if you're not living in it, but it would be considered Non Owner Occupied and the loan to value would be reduced depending on the specific number of units. Moving a family member in does NOT make it owner occupied in the eyes of Fannie Mae or FHA.

While there is no specific time period for occupancy with FHA other than occupying within 60 days, it is not the intent of FHA to improve anyone's investment portolio.

@Brie Schmidt wrote this 3 years ago and the rules haven't changed.

• Relocation: If the borrower is relocating and reestablishing residency in another area not within reasonable commuting distance from the current principal residence (generally at least 50 miles away), the borrower may obtain another owner occupied mortgage
• Increase in family size: The borrower may be permitted to obtain another home with if the number of legal dependents increases to the point that the present house no longer meets the family’s needs. The borrower must also:
  • Provide satisfactory evidence of the increase in dependents and the property’s failure to meet the family’s needs.
  • Pay down the outstanding mortgage balance on the present property to a 75% or less loan to value ratio, exclusive of any financed mortgage insurance premium.
• Vacating a jointly owned property: If the borrower is vacating a residence that will remain occupied by a co-borrower, the borrower is permitted to obtain another owner occupied mortgage. Acceptable situations include instances of divorce after which the vacating ex-spouse will purchase a new home or one of the co-borrowers will vacate the existing property.

Hope this helps

Stephanie