In a game-changing move for the real estate market, Fannie Mae has announced a significant policy shift that will make owning multifamily homes more accessible than ever before. Starting from the weekend after November 18, 2023, Fannie Mae will accept a mere 5% down payment for owner-occupied 2-, 3-, and 4-unit homes. This represents a remarkable departure from the previous norm, where duplexes, triplexes, and four-plexes required hefty down payments ranging from 15% to 25%. In this post, we will explore the implications of this exciting change and how it opens doors for aspiring multifamily property owners.
Lowered down payment requirements for multifamily homes
Breaking Barriers to Entry
Fannie Mae's decision to reduce down payment requirements is a game-changer for those looking to invest in multifamily properties. This new option breaks down barriers to entry, making it more feasible for individuals to dive into the world of real estate investment. Gone are the days of hefty upfront payments, as this policy shift paves the way for a more inclusive real estate market.
Expanded financing choices and easier approvals for multifamily homes
More Financing Options, Fewer Hurdles
This policy change extends to various financing options, including standard purchases, no-cash-out refinances, HomeReady, and HomeStyle Renovation loans for owner-occupied transactions. This means that first-time buyers and those seeking relief from high mortgage payments can now explore a wider range of financing choices. Furthermore, the maximum loan amount for 2-4 unit properties is set at $1,396,800, providing flexibility for those eyeing larger, more expensive properties.
The elimination of the FHA self-sufficiency test for 3-4 unit properties is another exciting development. It streamlines the pre-approval process for multifamily property buyers, reducing hurdles and making the path to ownership smoother.
Taking advantage of Fannie Mae’s policy change
Prepare for Opportunity
For potential buyers eager to seize this opportunity, it's essential to act now. While the policy change becomes effective in Fannie Mae's system after November 18, 2023, early preparation is key. Gather the necessary documentation and ensure your finances are in order to make the most of this favorable shift.
Building Equity and Income Stream
For owner-occupant landlords, this policy change offers more than just reduced upfront costs. It represents a significant chance to lower mortgage payments by leveraging rental income from other units within the property. This dual benefit not only makes multifamily homes more accessible but also allows homeowners to gain valuable landlord experience while building equity in their own property.
The Takeaway
Fannie Mae's decision to lower down payment requirements for multifamily homes is a game-changer. It's a progressive step towards improving access to credit and affordable rental housing. With this policy change, the dream of owning a multifamily home while generating rental income is becoming more attainable for mortgage loan borrowers. The real estate market is evolving, and Fannie Mae's new policy is leading the way towards a more inclusive and dynamic future. If you've ever considered investing in multifamily properties, now is the time to make your move.
——————-
Best Option Mortgage is a DBA of ML Mortgage Corp. ML Mortgage Corp. is a state-licensed mortgage lender, NMLS ID #362312, licensed by the CA Department of Financial Protection and Innovation under the Finance Lenders Law, License #60DBO69831. For other states, visit www.mlmortgage.net. To verify licenses, visit www.nmlsconsumeraccess.org. All loans are subject to credit approval and acceptable collateral. Additional terms and conditions apply. Programs, rates, terms, and conditions may change without notice. Not all programs are available in all states. There is no guarantee that all borrowers will qualify. Restrictions may apply. This is not a commitment to lend. © 2024 ML Mortgage Corp. All rights reserved.