Overview
The mortgage lending landscape is constantly changing to meet market conditions. One of the areas where changes are welcomed is the minimum qualification requirements for specific loan programs/products. Recently the mortgage world got positive news when Fannie Mae announced they will be relaxing the minimum down payment requirements for owner-occupied 2-4 unit primary residences, effective November 18, 2023.
What are the new changes?
Currently, owner-occupied duplexes (2-unit properties) require a minimum of 15% down payment to qualify and both triplexes (3-unit properties) or fourplexes (4 unit properties) require a higher minimum down payment of 25% to qualify.
This new change going into effect will lower the minimum down payment for all three multi-unit residential properties to a minimum of 5% down payment.
The Benefits
The primary benefit of this change is that it will require substantially less cash upfront for borrowers looking to purchase a 2-4 unit property to live in. This could allow buyers to use that money for improvements on the property or save it as reserves. This also makes multi-unit properties considerably more obtainable. Previously, only single-family residences or condos had low down payment options like this. This new update makes qualifying for homebuyers easier, especially benefiting first-time buyers who may have a limited down payment.
Conclusion
While housing affordability remains a challenge in the current higher interest rate and purchase price environment we find ourselves in, there is some relief coming in the form of changes to minimum qualification guidelines. Perhaps this change to owner-occupied multi-unit properties is just one of many to come in the near future. If you have any questions, feel free to reach out to discuss with one of our Mortgage Loan Originators at (760) 930-0569.
