Written by Guest Contributor: Doug Goelz, Mortgage Services

Purchasing a 2‐to‐4 unit property that you intend to live in can give you the low cost financing of an owner‐occupied property, plus the income of an investment property.  Financing guidelines for a 2‐to‐4 unit property are attractive because they require income ratios, assets, and credit scores similar to that of a single family home, but allow higher loan maximums:

PROPERTY TYPE       CONVENTIONAL LOAN MAXIMUM*

2 units                       $800,775

3 units                       $967,950

4 units                       $1,202,925

Plus, with conventional financing, lenders treat the property as “owner‐occupied,” allowing you to put down less than would be required if the property were strictly a rental.

At the same time, with conventional financing, lenders count the market rent from the other units(s) in the property towards your qualifying income for the loan.  Lenders use rent surveys to determine the market rent, so the amount used in the lender calculations could be much higher than actual rent paid by current tenants(s).  This is key in our market where rent‐controlled rents may be much lower than current market rents. The additional income counted by lenders helps you qualify for a larger loan.

Finally, should you decide to move out in the future (at least one year after you have bought and lived in the property), the attractive financing you obtained as an owner‐occupant can remain in place.

Do you want to explore your financing options for a 2‐4‐ unit property? Feel free to get in touch with me at 415‐730‐4665 or doug@emortgageservices.net.   

*Larger loans on 2‐to‐4 unit properties are considered “jumbo” loans and usually require larger down payments and have more stringent income and assets requirements.  Loans for properties with 5 or more units are not considered “conventional,” and generally have higher rates, are due in less than 30 years, and require higher down payments than conventional loans available for 2‐to‐4 unit properties.