Guiding your clients through the process of investing in multifamily real estate can be a valuable way to help them build wealth. Here are some things to know about buying and financing these types of properties. 

• • Homes with up to four units are considered residential for the purpose of financing. 
  • Buyers of a multi-unit home can use rental income to help qualify for a loan. This means if you have a client approved to purchase a single family home at a certain limit, they may have more purchasing power if they instead buy a two- to four-unit property that has rental income. Note that not all the income applies though. Typically, 25% is subtracted to account for vacancies and maintenance. 

• • Owner occupants of two- to four-units can choose among FHA loans, VA Loans or conventional financing, just like they would a single family home. There are some nuanced underwriting guidelines depending on the program and number of units, so always check with your Key Mortgage loan officer to uncover any requirements around the property’s self sufficiency or payment reserves.
  • Investors that do not intend to live in the multifamily property have some limitations. A higher down payment will be required and they may notice higher interest rates because these loans are considered more risky. 

A Key Mortgage loan officer can guide you and your clients through the purchase of a multifamily property. Reach out to learn more incorporating rental income, preapprovals and the different types of loans available to help your clients today.