Key Points

In November 2023, Fannie Mae updated its down payment requirements when buying an owner-occupied 2-4 unit property. The minimum down payment is now only 5% when purchasing a duplex, triplex, or quadplex (fourplex) as long as you live in at least 1 of the units.

This is a significant reduction when considering the minimum down payment was 15% for a duplex and 25% for a triplex or quadplex.

Downpayment requirements for non-owner occupied homes have not changed and remain at 15% and 25% respectively.

This change is welcomed since the FHA Self-Sufficiency Test applicable to all 3-4 unit properties purchased using an FHA loan made buying a 3-4 unit property in desirable and higher-cost metros, such as Los Angeles, San Diego, etc., not possible due to rising mortgage payment costs and rents that have not risen at the same rate. The FHA Self-Sufficiency Test states that the net rent of all units must be greater than the mortgage payment. Net rent is equal to the gross rent minus the greater of 25% of the gross rent or the appraisers estimated cost of vacancies or maintenance.

Watch our video above for more details on this new loan program update.

Click here to apply for a home loan

~Rob

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