Fannie Mae Introduces 5% Down Payments for Multi-Family Homes

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.