Multifamily mortgage financing just got cheaper.
What Is A Multifamily Home?
Multifamily residential homes are two, three, and four unit homes. These are also called duplex, triplex, and four-plex homes. I have also heard them called two-family, three-family, and four-family homes.
Fannie Mae defines multifamily property as, “A property that consists of a structure that provides living space (dwelling units) for two to four families. Although ownership of the structure is evidenced by a single deed.”
Any home with more than 4 units is considered a commercial property. These don’t qualify for a residential loan. I don’t do commercial loans. I do have some knowledge of commercial loans. They typically require large down payments, like 25% down or more. I doubt that will ever change.
Multifamily residential property has historically also required significant down payments. These down payments ranged from a minimum of 15% down to as much as 25% down.
How Did Things Get Cheaper?
Fannie Mae recently announced a 5% down payment option for multifamily homes, for Conforming loan amounts. The 5% down payment is not eligible for Conforming “High Balance” loan amounts, nor Jumbo loan amounts. This is a significant policy change. Interestingly, Freddie Mac has not made the same change. Not as of yet, anyway. Read More
