Conforming 5% Down Loans for MFH - House Hacking

[Jeff Dulla]

I see a lot of general terms for programs tossed around on here - Private Money, Hard Money, Portfolio Loans, etc. The vast majority without any concrete information. In response, thousands of people on here are wondering around in search of these mystical Hard Money loans that they cannot find. 

Many of these overnight solutions, get a huge loan with no income type loans are exactly as they sound, too good to be true. So I wanted to bring up a Conforming product that does exist and could be useful. Freddie has a 5% down product that works for MFH (yes, even three and four units). In fact the rates and PMI are actually better than many normal conforming loans.

You do have to occupy the home. But it sounds like a potentially great way to get started. You also have to take a homebuyer education class and landlord education class prior to the note date. 

Most any mortgage banker or broker you know should have access to this program. Hopefully this is a much more realistic solution for many of you out there. 

[Chris Mason]

FHLMC Home Possible is awesome.

Better way to get started than FHA 3.5% down when it's workable with the income limit and census tract, IMO, and in some places (Solano County being an example near me) the conventional conforming loan limit is actually higher than the FHA loan limit. 

And then, for the census tracts and income limit, you've got 90% of Oakland & significant chunks of other big cities like Los Angeles in "no income limit" census tracts. Because it's conforming and no high balance, down payments in markets like these are often non-round numbers like 8.427% just to hit the loan limit exactly to the dollar. 

If someone is getting crammed into FHA without at least exploring this option, it probably means that some lender isn't doing their job.

Because it's conventional, that means...

• No FHA property standards.
• No FHA "self-sufficiency test," which is a flawed test anyways.
• Easier to get offers accepted. If the offer doesn't get accepted, nothing else about the home or the financing even matters, so this is huge. Cashflow on a property that you didn't get the offer accepted because it was FHA is in all cases $0.00.