Imagine owning a multi-family home, living in one unit, and having the other units pay your mortgage. Sounds like a distant dream, right? Not anymore! Here’s a game-changer: Fannie Mae has just made it incredibly easier for you. Previously, buying a multi-unit home required a hefty 15%-25% down payment. But now, hold onto your hats, because you only need 5% down. Yes, just 5%!
Think about it. This isn’t just buying a home; it’s a smart investment strategy. You live in one unit and rent out the others. The rent you collect helps pay your mortgage. You’re not only becoming a homeowner but also stepping into the shoes of a savvy investor.
This opportunity is perfect if you’ve been struggling to save up for a larger down payment. It’s a chance to leap into homeownership while making a wise financial move. And for those of you who are already homeowners, this opens up a new avenue to expand your property portfolio with a smaller initial investment.
In a nutshell, Fannie Mae has just turned the tables in your favor. This is a golden opportunity to own a multi-unit property, enjoy the benefits of being a landlord, and make your homeowning dreams a reality with a much smaller upfront cost.
In addition, as we move into 2024, the conforming loan limits for 1 -4 units has increased significantly. Imagin living in San Diego County today as a renter and thinking of home ownership. That dream could be expanded to not just being a first-time homeowner but achieving the goal of home ownership and at the same time, pick up 3 additional units that could be rental units helping you pay for the over cost of homeownership. This concept is commonly referred to as house hacking. Looking at the loan limits, this equates to a potential purchase price of $2,037,000 with a loan amount of $1,950,150. Not for the faint of heart, but it is an option for the next real estate tycoon.
Advantages for multi-family homebuyers
- Buy sooner. Instead of waiting until you’ve saved a 15%-25% down payment, you can start with just 5%.
- Live in one unit, rent the other 1-3 units. Use the rent money to pay the mortgage on the building, as well as the associated costs of taxes, insurance, and upkeep.
- Benefit from growth in the entire property’s value, not just the space you occupy.
If you’ve heard that there’s financing for multi-family purchases with an even lower down payment than 5%, you’re right, but there’s a catch. While FHA has a minimum down payment of 3.5%, there’s a mandatory FHA self-sufficiency test for purchasers of 3-4 unit homes. This requires that the rental income is sufficient to cover the entire mortgage payment, including principal, interest, taxes, and insurance. Fannie Mae doesn’t have this requirement, giving you greater financial leeway. There are other differences, too, so your loan originator will help you decide on the right loan for you.
How to Qualify
Let’s start with a smart move – chat with a StreicherTeam loan officer. Now, it’s not just because we’re in the lending business, but it’s crucial for you to know what you can comfortably afford before you begin house hunting. Imagine setting your heart on a dream home only to find out it’s beyond your budget. That’s a heartbreaker we want to avoid. And if you’re eyeing a multi-family property, it’s even more essential. You need to be clear on the cash flow necessary to not just cover your mortgage, but also to keep the property in top shape. A chat with your loan officer will clear up all the details about mortgages and what you need for the journey ahead.
Ready to take this exciting step? Don’t wait. Reach out to us. It’s your opportunity to make your homeownership dream a reality, and we’re here to guide you every step of the way.
If you’re ready to explore this incredible opportunity, let’s talk. As your home financing expert, I’m here to guide you through this exciting journey.