Owning a multifamily property in a good location can be an excellent investment choice. But when you are just getting started in real estate investment, you must determine the best way to secure financing.
Whether you want to go small with a duplex or a larger multifamily complex, there are several options if you have good credit and a down payment saved.
If buying a multifamily with two to four units, and you plan to live in one of the units, obtaining financing is similar to getting a mortgage for a single-family residence.
FHA loans, conventional loans, and VA loans can all obtained for owner-occupant multifamily units, as long as you meet the qualifications. The qualifications are different for multifamily residences compared to single-family houses, including a larger down payment. Meet with your mortgage lender for specifics on how to qualify for an owner-occupant mortgage loan.
For residences with over five units, or if you are not going to live in one of the units, you are considered an investor. A conventional loan is your only financing option if this is what you are looking to purchase.
Conventional loans require a more substantial down payment and requirement list than an FHA or VA loan. Your credit scores, financial situation, and other investment properties will also be taken into consideration when applying for a conventional loan for an investment property.
When applying for a multifamily loan, the application process is more in-depth than a single-family home. The underwriter takes an in-depth look at your finances as well as the property in question. Be prepared for the underwriting and closing process to take longer than it does for a single-family residence.
Are you thinking of investing in a multifamily property now or in the future? Start preparing today, and contact NEHM to get more information about the types of financing you can qualify for.