5% down Conv. for 2-4 units is Available! Home Possible Freddie Mac

We talk about house hacking a lot these days on BP. The problem is that FHA has been a mainstay of this strategy typically because it has a very low down payment and is very flexible to qualify with.

FHA is limited since it has the self sufficiency rule on 3-4 unit primary owner occupied properties.

This leads the aspiring landlord or aspiring house hacker to buy only 1-2 unit properties which have less scale to start off in this awesome strategy of house hacking.

Recently Freddie Mac, the government sponsored entity, provides conventional financing to the market has come up with a program called "Home Possible."

This program is great as it provides the aspiring House hacker with another tool they can use to start their real estate investing with.

Here are some criteria on the program:

- 3-5% down min (3% down on single units/condo's/SFR's and min 5% down on 2-4 units)

- must occupy one of the units as a primary residence and own no other real estate at the time of application individually or jointly

- no self sufficiency requirement like FHA ( where 75% of gross rents have to be equal or greater to the monthly PITI payment)

- min 3% of the down payment must be from borrowers own sources (on 2-4 unit properties only)

- on 2-4 unit properties borrower must take a online landlord start course and get E-certificate 

- do not need to fit the "first time buyer," criteria just as long as you own no properties individually or jointly

- can use rental income (75% of gross rental income from other units)  of the other units to help you qualify for this property (OPM)

- you get reduced mortgage insurance or MI requirement meaning the mortgage insurance is cheaper monthly than other conventional loans with 3-5% down

- can use "roommate," or boarder income if you can prove the room mate has been living with you for 1 + years prior to your purchase ( TIP: so if you really need more income on a 4 plex you could use rental income from 3 other units and have a room mate in your 4th unit with you potentially). This is also key because FHA does not allow this much flexibility for boarder income to help qualify.

- min two months reserves required for your monthly payment (PITIA)

The only downside is that the program is limited by area median income limits in nicer areas but most areas have no income limit so you can buy with as little as 5% down payment on 2-4 unit properties and have a start at REI.

If you have any questions on how you can utilize this program let me know.