Buying a duplex or multifamily apartment complex can be a great way to generate steady income and build wealth through real estate. You can even live on-site while you build up savings and equity. Financing two- and four-unit complexes can be like obtaining a mortgage on a single-family home. This week, Stonebriar Mortgage tells Dallas, TX and California homebuyers how to invest in real estate using two- and four-unit financing loans.
Is it a Residential or a Commercial Loan?
The first thing to understand about financing complexes with multiple units is to know which category the units fall into. Generally, the smaller buildings of two to four units fall into residential home mortgages. Properties with more than four units will likely require a commercial lender and additional requirements that you must follow. Stonebriar is here to focus on two to four-unit complexes for the purpose of this topic.
Loan Programs for Multifamily Properties
The same loan programs that help purchase single family homes can be used for multi-family properties. FHA Loans, VA Loans, and conventional loans all have programs available for this larger purchase. Obviously, FHA and VA Loans will have specific qualifications and criteria.
Using FHA Loans
Using an FHA loan will require you to live on the property, but the program can be more accessible financially. You can get as low as 3.5% down payment requirements, good rates, and qualify even if your credit score is not perfect. The eligibility may be less stringent, but the loan amount and property must be within the FHA criteria.
Using VA Loans
For this program, you must be a qualifying current or former military member. You must still also live on-site. However, in this program, no down payment may be required. Costs and requirements for the program are also very reasonable. VA lenders will not require you to get private mortgage insurance and as with FHA Loans, you do not need perfect credit to qualify.
Using Conventional Loans
Conventional loans are non-government sponsored. There are still limits on the size and costs on the properties they will pay for. These are private programs and may require you to pay mortgage insurance and place larger down payments than with FHA and VA Loans. Your financial information and credit score may be more heavily scrutinized, depending on the lender.
Loan Programs for Multifamily Properties
In purchasing the complex, you must clearly decide whether to live on the property as you apply for loans. If you decide to live off-site and be the landlord, then you must consider how you will manage the property remotely and pay for this. Stonebriar Mortgage enjoys helping clients find two- and four-unit complexes in Dallas, Texas and California, please feel free to reach out with any questions you have about financing.
