Is this interest rate high for a multi-family?

[O'Licia Parker-Smith]

Hi everyone,

New to the forums and going through the lender approval process for a multifamily (aiming for a quadplex). This will be my second home purchase, but it'll be owner-occupied. I'm getting FHA interest rates in the mid to high 6% as of now. I know interest rates are dropping slightly, and I heard that multi-family properties tend to have higher interest rates compared to single families.

Curious to know, is 6.625% a high, average or low interest rate for a quadplex in this current market? Thanks in advance!

[Jay Hurst]

Quote from @O'Licia Parker-Smith:

Hi everyone,

New to the forums and going through the lender approval process for a multifamily (aiming for a quadplex). This will be my second home purchase, but it'll be owner-occupied. I'm getting FHA interest rates in the mid to high 6% as of now. I know interest rates are dropping slightly, and I heard that multi-family properties tend to have higher interest rates compared to single families.

Curious to know, is 6.625% a high, average or low interest rate for a quadplex in this current market? Thanks in advance

@O'Licia Parker-Smith FHA actually does NOT have an adjuster for 2-4 unit vs single family. The lender you have spoken to might have an internal adjustment but plenty of brokers would NOT have that adjustment. if you have a credit score over say 660 you can do a lot better then that in rate. Or, at the 6.625 have very little to no closing costs.

That all being said, as your loan officer mentioned anything about the FHA self sufficiency test for a 3-4 unit? If not, that might be trouble as FHA requires ALL 3-4 unit properties to pay for themselves. That for means for example if the rent in all four of your units was 1k, the prin/interest/taxes/home owners insurance/FHA mortgage insurance would all have to under 4k. IT is VERY hard to find properties that work especially in high cost areas like Austin (if you are buying there) if you are looking to small down payment like the 3.5% for FHA.