5% Down 2-4 unit Financing

[Landon Hoon]

Yesterday we received amazing news around 2-4 unit financing for house hackers!

This change will take place on November 18th and allow for clients buying a 2-4 unit owner occupied property to only put 5% down.

Main take aways:

• 5% down on 2-4 units
• No income limits
• No self-sufficiency test
• Primary residence required
• No first time buyer requirement
• Minimum credit score: 620+ and must also pass through automated underwriting system
• Reserve requirement: Based off automated underwriting findings
• Maximum Debt to income ratio: Based off of automated underwriting findings (expecting this to be 45%-50%)
• Loan limits:
• 2-unit = 929,850
• 3-unit = $1,123,900
• 4-unit = $1,396,800

Refinances:

• Clients can now also refinance on a conventional mortgage of a 2-4 unit with only 5% equity. This is a great solution for anyone looking to refinance out of an FHA mortgage.

Definition of limited cash out refinance by Fannie Mae:

• Client is not required to take any cash out but the maximum they can take out is the lessor of 1% of the loan amount or $2,000.

Accessory Dwelling Units:

• Fannie Mae does not currently allow for the use of ADU's on 2-4 units. We do have work arounds for this and you can reach out to me directly if you have a property that has an ADU for guidance.

Guideline below:

• https://singlefamily.fanniemae.com/media/36841/display

Please DM with any questions. 

[Landon Hoon]

No problem, here are a couple reasons why conventional is better than FHA for multi-units and why this product is so amazing:

1. FHA has lower loan limits than conventional.

2. FHA is more strict on the condition of the property (example if there is peeling paint, FHA will not allow this).

3. FHA has a self-sufficiency test for 3-4 unit properties. This test is that 75% of the total market rents must be greater than your total mortgage payment. In this high rate market it is very hard to pass this test with an FHA loan.