Primary Residence Rules

[Lue Yang]

Looking for a professional opinion. 

I would like to buy a multifamily property within the next year with my younger brother. Since I am out of state, the plan is for us to buy it together and he will make it his primary residence to get the lower down payment. I will provide all the upfront costs (down payment, closing, etc.) and he will be the property manager (finding tenants, maintenance, etc.). We would split the cashflow and equity. If this works, it would be a perfect way for him to get started in real estate by learning how to house-hack and also building equity while I will get a lower down payment into a high cashflow property. Also, would it be a good idea to make an LLC since we will be partners? My goal is to do this for all my 4 younger brothers once they become of age.

Let me know if this would pass any primary residence rules since I won't be living there, but he will. Thanks! 

[Jamel Romans]

Hi Lue,

I am a mortgage lender with United Mortgage Corp in NY. Also a multi family investor/house hacker in Brooklyn NY. 

I am very familiar with guidelines especially since I handle these loans. You can up to 4 borrowers on one loan by the way. You can get 2-4 unit properties using FHA 3.5% down or you can use Conventional loan 2-4 unit properties using 5% down.

As far as primary residence and getting the 3.5% down payment on FHA. Being that your brother lives here he must show he has employment here in NY he will be good for the loan using FHA. With you if your employer is not based in NY. You must show some type of proof that you work remotely and plan to live in the home. On an FHA loan all borrowers purchasing must owner occupy the property. We can say that you will be living in the same unit as your brother. This is how you get the cheaper down payment. Also the rental income of the units will allow you all to qualify for a higher loan amount.

Best,

Jamael Romans

United Mortgage Corp Lender

Woodbury NY