November 3, 2023

What is the Minimum Down Payment for Multi-Unit Properties?

What is the Minimum Down Payment for Multi-Unit Properties?

Considering becoming an investment property owner? Buying a home and becoming a landlord in one fell swoop is immensely more attainable as of November 18th, 2023. Fannie Mae reduced the minimum down payment for an owner-occupied multi-unit to just 5%. This provides more buyers more opportunity to put their housing budget toward earning both monthly income and long-term wealth. 

What is the Minimum Down Payment for Multi-Unit Properties?

The minimum down payment for a residential multi-unit property is 5%. This includes 2-,3-, and 4-unit properties in which one of the units is owner-occupied. 

  • 5% down payment requirement
  • One unit must be owner-occupied
  • For duplexes, triplexes, and four-plexes

Fannie Mae’s lower down payment requirement is a game changer because, up until November 18th, 2023, the minimum was 15-25% depending on the number of units. This required someone to have a significant (sometimes prohibitive) amount saved up to cover the upfront cost of becoming an investor. But if the minimum down payment for multi-unit properties is now the same as the minimum for a conventional single-unit purchase, that means someone who is ready to buy a home is simultaneously ready to become an investment property owner in terms of upfront cost. 

Why Choose an Owner-Occupied Multi-Unit? 

Having real estate holdings and earning rental income is a goal for many. A great way to start is by buying a building in which you can have a home and earn income from it too. With rent prices as high as they are, it is extremely realistic that what you obtain in rent will more than cover the cost of owning that unit. 

In addition to income potential, loans for an owner-occupied property are generally easier to obtain, have a lower down payment requirement, and typically offer lower rates than if you purchased a single-unit property for the purpose of renting it out. If you decide later to purchase another home and keep the multi-unit solely as an investment property, you will benefit even more from having taken out an owner-occupied property loan at a lower rate that you can now earn maximum rental income from. 

How to Include More Multi-Units in Your Search

The 5% minimum down payment for multi-units that are owner-occupied extends to HomeStyle Renovation Loans. A renovation loan provides you the funds to purchase and renovate a property all with one mortgage. It’s an affordable way to tackle a fixer-upper because it requires the minimum amount of money upfront and allows you to finance the project over a term of 30-years, meaning a lower monthly payment. This is a great alternative to putting a down payment on a home plus having the available cash to pay for renovations upfront or take on a line of credit from a bank with a high interest rate. With a HomeStyle Loan in hand, you can open your search up to fixer-uppers, giving you more properties to choose from. 

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