When purchasing a multi family home, you will find multi family lenders who have different criteria and requirements depending upon whether you are financing a primary residence or an investment property.
Multi Family Loan Requirements
The requirements to finance a multi family home will vary based upon whether you plan to occupy the property as your primary residence or if it will be an investment property.
The requirements will also be different for each loan type that you apply for when purchasing a multi family home.
Primary Residence Multi Family Loan Requirements
If the multi family home will be your primary residence, you can use an FHA loan to purchase the property up to 4 units. The great part about using an FHA loan for a multi family home purchase is you are able to use 75% of the rental income as income on your loan application. This added benefit is for the units that you will rent, not the one that you will live in and it can help you to qualify for a larger loan amount.
If you are self employed and cannot document your income using tax returns, you can use a bank statement loan to purchase a multi family home. With this program, you will not need tax returns. Read [bank statement loans] for more info on that program.
Multi Family Investment Loan Requirements
If you are purchasing a multi family home as an investment, you will have two options. First, you can purchase the property using your income on your tax returns which is what most traditional lenders will ask for. This is not always possible especially if you plan to purchase a few properties.
The best option is to work with a true investment lender that offers competitive DSCR loans. With this mortgage program, you will never supply income documentation and you do not need to be employed. The loan is approved based upon your credit scores, down payment, and the potential income for the property. Read about DSCR Lenders.
Multi Family Lenders
Lenders who finance multi family properties may have what is called “lender overlays” which are adjustments to their loan requirements. The requirements will vary not only by lender, but also depending upon whether the property will be used as a primary residence or an investment.
Below we will outline what we believe are the best multi family lenders for both primary residences and also investment properties. Keep in mind that your specific scenario could mean that a different lender not listed below may be best for you. Therefore, please complete this short loan scenario form and we will contact you to discuss your options.
Multi Family Lenders for Primary Residences
These are a few lenders who offer programs for multi family primary residences up to 4 units. Not all lenders will provide financing for properties up to 4 units and some of the ones who do will have guidelines that may restrict your ability to qualify. This list is just a small sample of what may be out there. Your first step is to contact us to discuss your needs and we will help figure out the best option for you.
Multi Family Lenders for Investment Properties
Investment property lenders are going to offer the programs best suited for buying a multi family home without having to provide income documentation. These lenders are going to look at the property’s potential cash flow and will make a determination on your loan. The other two factors which will play a role are your credit scores and down payment.
These are just a few multi family lenders who finance investment properties. However, not all of these lenders may be a fit for you. Contact us and we will help you to find the best option.
Multi Family Financing Rates
When financing a multi family building, the interest rate is going to vary based upon many factors. The first is whether the home is a primary residence or an investment property.
Multi family primary residences of up to 4 units can be financed with an FHA loan. FHA loans have some of the most competitive rates in the industry and with only 3.5% down. Read [FHA loans]. Rates for primary residence multi family homes will likely change daily. Therefore, you should contact us here for a quote based upon where rates are today.
If you are looking to purchase a multi family building as an investment, your interest rate will be based upon the following criteria:
- Credit score
- Down Payment
- Type of Property
- Number of Units
- Potential Cash Flow
How Many Multi Family Mortgages Can I Have?
Most traditional lenders will not allow you to have more than 4 or 5 mortgages at a time because they do not specialize in financing multi family investment properties. You can finance as many properties as you want if you are working with the right lender. We recently helped an investor to finance 64 properties in one year.
Is it Easier to Get a Loan for a Multi Family Property?
It is easier to qualify for for a loan for a multi family property, but it is harder to find the right lender who can help with your mortgage. Once you find that lender, then qualifying is easy.
Can you Put 3% Down on a Multi Family Home?
You can put 3% (3.5%) down on a multi family home if you use an FHA loan to finance the property. The FHA guidelines permit home buyers to purchase a multi family home with a small down payment. However, the loan amount cannot exceed the FHA loan limits for the county where the property is located.
What Others are Saying About Multi Family Loans
Eric Jeanette – “Finding the right multi family lender can be the difference in how successful you will be in your real estate investing ventures.”
Lime One – “Value added bridge loans can be used to rehabilitate a property before renting or selling it.”
Military.com – “You can use your VA loan to purchase a multi family investment property if you also live a that address.“