All Forum Posts by: Jessica Von Zastrow

Hi Nina, 

You're in the right place to start your investment journey! Multi-family properties are a great option to have a lower cost/unit and higher cash flow. Purchasing a multi-family property can be more expensive up front compared to a single-family home due to down payment requirements for conventional loans. 

• Single Family (1 Unit) = minimum 15% down payment
• Multi-Family (2-4 Unit) = minimum 25% down payment

(Fannie Mae Guidelines)

Hi Simon! 

House hacking is a great way to get started in real estate investing! FHA loans have specific rules and guidelines for financing multi-unit properties, and it's important to understand these rules before you make a purchase.

According to FHA guidelines, multi-unit homes with 4 or fewer units can be financed with an FHA loan. If you are planning to live in one of the units and rent out the others, you may be able to use the future rental income to qualify for an FHA loan. However, the rules around this are tricky and it's important to understand them before you move forward.

Depending on the property, your lender will need to determine your Self-Sufficiency Rental Income Eligibility (as mentioned above). This refers to the rental income produced by the property above the Principal, Interest, Taxes, and Insurance. There are also required reserves needed (additional savings) that you might need to consider. If you have further questions or would like to discuss your home purchase goals in more detail, I'd be happy to help.

I agree with a lot of what has been said here! The key distinction between a second home and an investment property is the intent of the buyer to occupy the property. For a property to be considered a second home, it must be occupied by the borrower for some portion of the year. A few other requirement for second homes include:

• Is restricted to one-unit dwellings
• Must be suitable for year-round occupancy
• The borrower must have exclusive control over the property
• Must not be rental property or a timeshare arrangement
• If there is rental income from the property, the loan can be a second home as long as the income is not used for qualifying purposes
• Cannot be subject to any agreements that give a management firm control over the occupancy of the property