Something I learned today!
{Three to Four Unit: A three- to four-unit property is a Single Family residential property with three to four individual dwellings. The mortgage must obtain a completed form HUD-92561 (Borrower's contract with respect to Hotel and Transient Use of Property)- Required at initial application and closing.
Self- Sufficiency of Rental Income Eligibility- Net Self-Sufficiency Rental Income refers to the Rental income produced by the subject property over and above the Principal, Interest, Taxes, and Ins (PITI). The PITI divided by the monthly Net Self-Sufficiency Rental Income may not exceed 100 percent for three- to four- unit properties. Net Self-Sufficiency Rental Income is calculated by using the appraiser's estimate of fair market rent from all units, including the unit the Borrower chooses for occupancy, and subtracting the greater of the appraiser’s estimate for vacancies and maintenance, or 25 percent of the fair market rent.
Reserves for Three- to Four- Unit Properties. The mortgagee must verify and document Reserves equivalent to 3 months' PITI after closing for 2- to 4- unit properties. If using reserves as a compensating factor, minimum reserves are 6 months or more. }
Which in a nutshell says that the rent that you receive on the other 3 units, cannot exceed the total payment on your mortgage. Which is determined by the appraiser.
