Why do interest rates go up for more units? Seems irrelevant.

[Chris May]

I'm trying to buy a 2-4 unit property for 1.0-1.2M. I've been approved by my lender, but at rates of 4.25% for a duplex, 4.375% for a triplex, and 4.5% for 4 units. 

Why does the interest rate go up? I suppose I could understand if I needed the rents to qualify based on my income, but we'll be owner occupying and we're approved for a SFH well above 1.2M.

What difference does it make from a risk perspective? Am I just falling into a one size fits all risk model that doesn't really make sense for my particular situation?

Are there any lenders that will give SFH rates for multi family properties, assuming we don't need the rents to qualify?

It makes the 4 unit properties significantly less attractive from a cash flow perspective.

Hope my question makes sense.

[Chris Mason]

There's a jumbo investor I almost always end up using for duplexes that'll give you SFR pricing if you qualify without using rental income to offset PITI.

We're adding a jumbo investor coming online in a few weeks that'll allegedly do SFR rates for 3-4 units if you don't need to use rental income to qualify, but I haven't seen the rate sheet yet so am skeptical.

From a risk perspective, using rental income to offset PITI implicitly means more risk because those tenants aren't likely to consistently have your 740+ FICO score or all of those other attributes that would have earned you a competitive interest rate on an SFR. Fannie/Freddie do not have that "if you qualify without rental income" thing, which IMO they should.