Financing First Multifamily

[Jon Foley]

I’m sure this question has been asked numerous times, feel free to link me to this existing topic. 

I’m trying to buy my first duplex or multifamily. I’ve started to get pre-approved, but I’m not thrilled with the results. Since I don’t plan on house hacking, lenders are saying that investment multifamily properties are currently subject to 25% down (in Florida) and higher interest rates (~5%).

One lender vaguely hinted that if I “INTEND” on living in the duplex, everything changes for the better. I just moved last month and don’t want a bunch of red flags. Does anyone have advice for this situation? 

I’m guessing that I can INTEND on living in the duplex and change my mind after the purchase. Since I don’t make a ton of money, lenders will probably require that my current house have a lease before lending more money? 

Thanks everyone!

[Jason Wray]

Jon,

If you already own a home and just moved the underwriters will not approve your MF purchase as a primary. They are trained to look for indicators of primary home purchase versus investment. But if you just moved and its a rental than you would be fine. Fannie Mae & Freddie mac both require 25% down for 2-4 units and some lenders require 30% or more depending on credit and DTI. My suggestion would be to save a little more or buy a second home with 10% and you can always rent it out as a STR.

The problem with second homes is you just have to make sure it's viewed as such.  Best guidance would be to look for something on a lake, river, beach, golf course, out of state.  Something that gives it that amenity value or again out of state some lenders require it be 50 miles from primary but that's not a exact mileage requirement.