Mortgage brokers giving different responses?

Question

Just received this from a mortgage broker I found on Zillow

“Unfortunately since you already owned a 2 family. Buying another multi will not work. You will need to have a valid reason why you are moving from a 2-family to 3-4 unit family home where you are going to have share units more than one unit from a 2 family.

You can however buy a single family home with 5% down.

Please let me know if you have any questions.”

In 2017 I went from a single family to a three unit with no issues, the same lender has already issued me a pre-approval right now I’m just shopping for the best rate and surprisingly a lot of mortgage brokers seem to be giving different answers. I know each bank or mortgage broker has access to different deals, One mentioned needing 20% down for an owner occupied 3 family? Even though I have over a 750+ credit score, I know times are tough and a lot of lenders are worried about giving out loans but aren’t a lot of these mortgage brokers paid by commission and not salary?

Wayne Brooks · Answer

@Roger Evans Forgot to clarify....20% down on Fannie Is for an owner occupied 3 unit....5% down is only for a sfr, owner occupied.

Roger Evans · Answer

@Wayne Brooks going to owner occupy so no 5%

Wayne Brooks · Answer

@Roger Evans Yes, a conventional Fannie loan for 3 units is 20% down....has been as long as I can remember.

Alan Lacey · Answer

@Roger Evans get a different lender. Worse case they should ask for a letter of explanation. Only time I can see it being a true issue is if someone bought the property and moved out in less than 12 and then looking to buy another multi family.You will need significant down payment on conventional 3-4 unit. Fha works , but on 3-4 units rent from non occupied units has to cover payment. Google fha self sufficiency and it will come up.

Roger Evans · Answer

@Upen Patel

Rah, I understand what you mean. I have in the past moved from a single family to a three unit and had no issues. Just got a pre-approval to purchase another 3-4 unit so we’ll see.

Dominique Pradel-Lewis · Answer

Strange I didn't realize  that was a thing.  Both  2 and 4 units are considered residential so why would the bank care?

Upen Patel · Answer

@Roger Evans Agencies guidelines and enforcement's change all the time. Agencies want to support home ownership and investors, but they are not interested in supporting investors buy investment properties with low down payment under the disguise of owner occupied purchase.

For an owner occupied purchase the expectation is that you are moving up/forward. Moving from a 2-unit to a 3-4 unit is moving backwards. In the same market this would be a guaranteed denial. You might be able to move to an another 2-unit if there were legitimate reasons (e.g. closer to work, better schools, your family has grown and you need more space, etc.).

There are no restrictions to you buying the multi-unit as an investment purchase and the needed down payment.

Roger Evans · Answer

@Russell Brazil Ya I’ve gotten mixed reviews, I haven’t used the FHA loan yet so that’ll be my plan.

Russell Brazil · Answer

Going from multi to multi with owner occupant loans will typically be rejected by the underwriters.