Groundbreaking 5% Down Payment Policy Revolutionizes Multi-Family Property Acquisition (Fannie Mae Announcement)

Fannie Mae’s recent announcement brings exciting news for prospective homebuyers, particularly those eyeing multi-family homes. Effective November 18th, 2023, Fannie Mae has introduced a groundbreaking policy that allows buyers to acquire multi-family properties with a mere 5% down payment. This marks a remarkable departure from the previous hefty 15-25% down payment requirement. The new policy extends to various scenarios, including standard purchases, no cash-out refinances, as well as Homeready and HomeStyle Reno loans for owner-occupied properties.

What sets this apart from other financing options, such as FHA, is the elimination of the stringent requirement that the rental income must cover the Principal, Interest, Taxes, and Insurance (PITI). In the past, this condition was notoriously challenging to meet. With this new program, buyers no longer need to worry about fulfilling the self-sufficiency test, a barrier that had historically hindered those looking to invest in 3-4 plexes using FHA financing.

This transformation holds immense significance for the real estate market. It opens up the doors to a larger pool of potential buyers who are now more inclined to make the leap into 2-4 unit property ownership, thanks to the reduced 5% down payment requirement. As a result, there will be an increased demand for these types of properties, directly benefiting sellers. This heightened demand can lead to higher sales prices and quicker sales, effectively unlocking the floodgates for a surge of eager buyers.

The eligibility criteria for this innovative program involve having a current housing expense and utilizing rental income to qualify for the mortgage. It’s important to note that this program applies exclusively to standard conforming loan amounts and does not extend to high-balance loans. The maximum loan amounts for 2024 are as follows:

  • Two units: $960,300
  • Three units: $1,160,730
  • Four units: $1,442,600

This new policy offers a plethora of benefits for potential homebuyers. These include:

  1. A reduced down payment requirement, with no onerous self-sufficiency test.
  2. Access to conventional loans, providing an attractive alternative to other financing options.
  3. The flexibility to use rental income to qualify for the mortgage, making it easier for buyers to meet the criteria.
  4. An opportunity to reside in the property while collecting rental income, facilitating the growth of landlord experience.

As for eligibility, this program is well-suited for:

  • First-time homebuyers looking to enter the real estate market.
  • Borrowers with a current housing expense who seek a more affordable option.
  • Borrowers interested in using rental income to meet mortgage qualification requirements.
  • Individuals purchasing multi-family homes for owner-occupancy.

If this new 5% down payment option for multi-family homes has piqued your interest, we encourage you to reach out to us today. Our team is here to provide you with comprehensive information about the program, guide you through the process, and help determine your eligibility. Don’t miss out on this opportunity to make your multi-family property dreams a reality!

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