Connecticut Multifamily Loans
Are you looking to make an investment and have your mortgage covered? If so, there are some great multifamily loans to choose from. A multi-family property can be a duplex or a 2 to 4-unit home. Their are two main types of multifamily loans: FHA and Conventional Mortgages. Owner-occupants may choose government-backed loans as well as conventional ones. Whereas most real estate investors will utilize conventional financing.
FHA Multifamily Loans
The Federal Housing Administration (FHA) offers and ensures multi family home loans. The requirements to qualify for an FHA multi-family home loan are similar to those when purchasing a single-family home:
- A down payment as low as 3.5% of the purchase price.
- There are credit score requirements
- Debit to Income Ratio below 43%
- Finally, there is a monthly mortgage insurance fee
You may have to show that the property can generate at least enough income to equal the monthly mortgage payment, along with insurance and taxes.
The most important thing to remember when looking to purchase a multi-family home with an FHA loan is you must occupy one of the units. When looking for the multi-family home, be sure that the property is located in area that you’ll be comfortable living in for the long term
Conventional Loans
If you are looking to invest in a multi-family home that you will not be occupying, a convention loan will the route you take. The requirements for a conventional loan are:
- For a duplex, a down payment of 20% of the purchase price would be required.
- For properties with more than 2 units, a down payment of 25-30% may be required.
- There are credit score requirements
- A debt to income ratio less than 45%
Can Rental Income Help you Qualify for a Mortgage Loan?
Generally, yes. The rental income from duplex or multi-family units may be used to qualify a borrower for a loan. Lenders prefer that there are actual renters in the units rather than projected rental income. Anticipated rental income of empty units cannot be used as part of the loan underwriting. To ensure rental income can be used for income verification, renters must have a signed lease in place.
Purchasing a multi-family home is a great way to get into real estate. If you’re able to keep the property rented on a regular basis, the rental income may be enough to cover your housing expenses. Contact me today to find out your Connecticut multifamily mortgage options! The pre-approval process is easy.
Elizabeth Welch NMLS 1618684
Company NMLS 117273
210 South Main Street
Middletown CT 06457
Liz@northeast-mortgage.com
860-575-5448
