Only 5% Down for a Multifamily Property?

Fannie Mae’s recent policy overhaul significantly slashes down payment requirements for multifamily homes, dropping them from the previous 15-25% range to just 5%, effective after November 18, 2023. This broadened policy encompasses various loan types, enabling larger loans up to $1,396,800 for these properties. This aims to make owning multifamily properties more accessible, especially for first-time buyers or those looking to invest while enjoying homeownership benefits. Here are some key highlights below:

Previously, many prospective buyers eyeing multifamily properties leaned towards FHA loans due to their low-down payment option. However, these loans posed challenges, notably the self-sufficiency test for three- and four-unit homes, demanding rental income to cover the entire mortgage after accounting for vacancies. With Fannie Mae’s policy change, the removal of the FHA self-sufficiency test for 3–4-unit properties streamlines pre-approval processes, making multifamily homeownership more accessible. This pivot not only emphasizes homeownership but also fosters strategic investment opportunities. The reduced down payment opens avenues for leveraging rental income to manage mortgage expenses while simultaneously building equity.

This shift underlines Fannie Mae’s dedication to broadening credit access, promoting homeownership, and fostering affordable rental housing. Ultimately, it empowers potential homeowners with avenues to navigate escalating rents and mortgage rates more effectively.


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