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If the property I am interested qualifies as an "income" property, is there a larger down payment required?

Looking to buy a 4-plex, and rent out 3 of the units. I can pay 10-15 percent down. by jeanie.ward48 from Palm Bay, Florida. Nov 16th 2015 Reply


William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,933 contributions

I think you might be confused, so let me try to explain.. There are 3 different categories when it comes to purchasing a home using conforming financing... you are buying a "Primary Residence", a "2nd Home" or an "Investment" property. If you purchase a 4plex, but you will be living in one of the units, then you are buying a "Primary Residence".. and your loan pricing will be priced accordingly. However, because multi housing does represent a greater risk for the lenders, they will price these loans a bit higher than a single family home.. Also, the loan to value is also different depending on the number of units.. For conventional financing, for a principal residence 4plex, you will need 25% down payment.. But FHA only requires 3.5% down.. FHA has upfront and monthly mortgage insurance, but when compared to the higher rate of conventional financing, your probably better off with FHA since the rate difference from a single family home vs. 4plex is not that much different.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Nov 16th 2015
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Larry Gray (lgray_312_247)
#566 ranked lender in California - 1,127 contributions

As William mentioned, 3.5% down is sufficient so if your monthly payment on a prospective mortgage loan works for you, then consider keeping the money in reserves for future home needs. Fortunately income from the property based on appraiser's "rental survey' can be used towards your qualifying income for the property.

Nov 17th 2015
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