Breaking News! Fannie Mae Is About To Introduce A 5% Down Payment Opportunity For Multi-Family Homes!
Fannie Mae has made an exciting announcement and a groundbreaking policy shift to potentially narrow your path to home ownership! Effective November 18, 2023, they are implementing a mere 5% down payment option for owner-occupied 2, 3, and 4 unit properties.
This is huge! Historically, the down payment requirement for a multi-family home was 15%-25% of the property’s sales price. This makes purchasing multi-family homes much more affordable and accessible to more borrowers. Now more than ever, more individuals can now seize the opportunity to invest in potential income-generating properties. However, this policy shift strictly applies to just standard purchases. There are no cash-out refinances, HomeReady and HomeStyle Renovation loans available for owner-occupied properties.
First-time homebuyers and borrowers can now benefit from a conventional loan and use rental income to pay a portion of their mortgage. Note that the loan cap amount for these 2-4 unit homes is now $1,396,800. This allows buyers to potentially acquire larger and pricier properties, easier than ever! Additionally, the removal of the FHA self-sufficiency test for 3-4 unit properties, ensures a smoother path for buyers to be pre-approved for multi-family housing.
What Is The FHA Self-Sufficiency Test For 3-4 Unit Properties You Ask?
The old, soon to expire FHA Rule, stated that 75% of the rental income must exceed the monthly mortgage for the property to be self-sufficient. This percentage used to have to be at least enough to cover the mortgage payment, known as PITI (Principal, Interest, Taxes, and Insurance.)
Now, there is a bright future for real estate investing thanks to Fannie Mae’s updated policy. This is a huge opportunity and those who have the means, should definitely begin planning and preparing to embark on their multi-family homeownership investment journey!
Taking Advantage Of Fannie Mae’s Policy Change
Borrowers interested in taking advantage of this upcoming opportunity can go ahead and apply now. The new policy is set to go into effect in Fannie Mae’s system after November 18, 2023. This gives potential buyers some time to prepare and complete all the necessary paperwork before the new policy is implemented.
For owner-occupant landlords, this new policy presents a significant opportunity to reduce mortgage payments by leveraging rental income. It also allows home buyers an opportunity to gain valuable landlord experience. They can now collect rent from their other units and build equity in their own property at the same time!. The dream of owning a multifamily home while generating rental income is about to become a reality…thanks to the forward-thinking of Fannie Mae!