The Lowdown on Multi-Family Financing

September 29, 2021 by DRG

Thinking about buying a multi-family home or investing in the multi-family market? You’re not alone.

Multi-family property investing—especially duplexes, triplexes and fourplexes—has become incredibly popular for investors who want to see the benefits of tax breaks, easier financing, faster portfolio growth, and increased passive income.

The options for financing multi-family homes vary depending on whether the buyer intends to occupy one of the units in the building or buy the property as a stand-alone investment. Investors who are interested in purchasing a multi-family home to both live in and rent out will maximize their benefits. Low down payment and low interest loans are available that make it possible for buyers to enjoy a steady cash flow and minimal monthly living expenses as owner-occupants.

There are several loan options available for owner-occupied, multi-family property purchases.

Federal Housing Administration (FHA) Loans

FHA loans are government-insured loans with long terms, low fixed rates, and only require a 3.5% down payment. These loans are perfect for the first-time investor who wants to live in the property, jump start their portfolio, and learn what it takes to manage a property. FHA loans also include an option to finance rehab work for those looking for value-add opportunities.

Conventional Loans

These loans are a great option for the experienced investor or one with more access to capital. Down payment options will vary depending on the occupancy type and number of units in the property.

Creative Financing

These are financing options for investors who don’t meet all the requirements of traditional loan programs. Options include private money, renovation loans, or seller financing.

Every property investor has different goals for their portfolios, and it’s important to talk to a professional lender who knows about all the financing options out there. They have the knowledge and experience you need to jump into rental properties and create wealth from multi-family investing.

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