Industry experts praise the recent decision made by Fannie Mae, citing opportunities for increased affordability and growth in real estate investments.
Lower Down Payment Requirements for Multi-Family Homes
Effective November 18, 2023, Fannie Mae Conventional Loans will allow borrowers to put only 5% down when purchasing a 2-4 unit owner-occupied home.
The policy change applies to owner-occupied transactions for the following:
- Standard purchases
- No-cash-out refinances
- HomeReady and HomeStyle Renovation loans
First-time buyers and individuals seeking to offset high mortgage payments can take advantage of Fannie Mae’s more accessible financing options with the new update.
The maximum loan amount for 2-4 unit properties is set at $1,396,800.
Fannie Mae no longer requires the FHA self-sufficiency test for 3-4 unit properties, meaning that buyers will now face fewer hurdles when seeking pre-approval for 3-4 unit multi-family homes.
Previous Fannie Mae Down Payment Requirements for Multi-Family Homes
Previously, borrowers had to put down 15% for two-family homes and 25% for 3-4 family homes to secure a Fannie Mae Conventional Loan, making the 5% down payment update a welcome and significant change for borrowers.
Benefits of a Conventional Loan
Conventional financing offers borrowers the following benefits:
- Many sellers prefer conventional loans, making it easier to get your offer accepted
- More likely to avoid potential appraisal issues
- Potential to save on mortgage insurance costs
Closing Thoughts
By lowering the down payment requirements for multi-family homes, Fannie Mae is making steps towards improving access to affordable housing opportunities.
With this progressive policy change, the dream of owning a multi-family home and the possibility of generating rental income is becoming more attainable for borrowers. Give us a call or visit us online to learn more about this exciting update today.