Unlocking Homeownership: The New 5% Down Payment from Fannie Mae on Multi-Family

Hello, future homeowners and savvy investors!

I'm excited to share the fantastic news that could transform your thoughts on homeownership and real estate investing. Starting after November 18, 2023, Fannie Mae is introducing a groundbreaking change: they will now accept a mere 5% down payment for 2-, 3-, and 4-unit homes you plan to live in!

⚡️Why is this a Big Deal?

Acquiring a multifamily home required a substantial 15-25% down payment for years. However, with Fannie Mae's new guidelines ( see below), purchasing such properties just became more accessible than ever before. Consider this: previously, buying a $500,000 triplex meant putting down $125,000. Now? Just $25,000! That's a significant $100,000 difference!

⚡️Why Consider a Multifamily Home?

Buying a multifamily property isn't just about having multiple units. It's a strategic move. You can live in one unit and rent out the others, generating rental income. This can offset your mortgage payments and even provide a passive income stream. Plus, it's an excellent opportunity for budding landlords to gain experience.

⚡️What About First-Time Buyers?

Good news! Even if you're a first-time buyer, in most scenarios, you can use projected rental income from your property to help qualify for the loan, as long as you're currently paying rent somewhere. This can significantly aid in affording the mortgage rates in today's market.

⚡️Why is Fannie Mae Making this Move?

Fannie Mae recognizes many challenges in today's housing market, especially with rising rents and mortgage rates. Adjusting their guidelines aims to support credit access and promote affordable rental housing. This change means you could transition from renting a room to owning a multifamily property, all while fostering affordable rental opportunities in your community.

⚡️ How Much Can I Borrow?

While the change is limited to standard conforming loan amounts (excluding high-balance loans in pricier areas), plenty of leeway remains. Here's a breakdown for 2023: 2-unit: $929,850 3-unit: $1,123,900 4-unit: $1,396,800

⚡️When Can You Jump In?

If this opportunity resonates with you, start immediately gathering your income, assets, and employment documents. While you can begin your application process now, some updates are still pending in Fannie Mae's systems. This includes details about asset reserve levels and rates from private mortgage insurance companies for these new loans. But don't let that deter you—be proactive and get a head start!

⚡️In Conclusion

This is a transformative moment for prospective homeowners and budding landlords. With just a 5% down payment, you could be on your way to owning a multifamily property and reaping the benefits of homeownership and real estate investment. Reach out to us, and let's explore how this change can pave the way for your future in real estate!

Brent Willis, CMPS

Branch Manager NEO Home Loans