Multifamily Financing

Multifamily housing is a type of residential property that has more than one unit in the same building.

Multifamily housing can be divided into 2 sections:

2-4 units: duplexes, triplexes, and quadruplexes (4 units)
5+ units: apartment buildings

Conforming loan limits increase for Multi Family dwellings. The greater the number of units (to a limit of four) the greater the conforming loan limit will be in the properties respective state.

The property with 2 - 4 multi units are considered as a residential property. Thus there are more opportunities and easier to finance this type of property through regular mortgage lenders.
However, the property with 5+ units are considered as a commercial building. Then the broker usually has to go outside of boundary to look for fund from commercial lenders.

Generally the more units a property has the tougher the financing will be. The requirements are usually a little more strict with more units to a property and the rates are usually a little higher to go along with the home loan too. One reason for this is due to the fact that multi-unit properties are a higher risk to a lender. Many people buying multi-unit properties are relying on rental income to be produced from these properties, and if they go unrented for any period of time this may put the homeowner into a bind and could cause some problems with making their payments on time or even at all.

The ability to secure 100% financing usually stops at 4 unit buildings. Any building that has 5 units generally require a down payment of up to 20%.