1st time buyer & finding mortgage 4 Multi family

why?

The requirements are different for 2- or 3-family vs. 4-family or more. Generally, you will need to put more down than for one owner-occupied unit (think 30%+ rather than 20%.) Also, unless the other units are currently occupied, the income will not count to figure affordability.

I thought the way it works (assuming the owner occupies one of the units) is that the same % down applies for 1 or up to 4 units ... but they add more points for more units.

I'm thinking 2 or 3 families... Do banks consider the incomes from rentals part of your yearly income to calculate how much mortgage you qualify for? What would be the minimun downpayment on such multi family property that cost less than a $ million ?

You'd have to check if anything changed; last year I was told: 30-35% dp for the best rate, count 75% of income if the units are currently rented.

What maly said. You may also need to get a "commercial" mtge for 4+fam, and they'll look at the rent rolls.

You need to get a mtge that's the most favorable for you. If you want banks to consider the income from rentals, that may force you into a commercial mtge which is generally more restrictive (no prepayment, larger down, shorter fixed rate). If you can't afford the mtge payments w/o rental income from the other units, I don't know that you'll qualify for a residential mtge. Different banks have different requirements. I highly doubt that you'll be putting down less than 20%. Wouldn't be surprised if some banks ask for 40%.

You kinda have to lay it out all for an analysis:
1) Your income
2) Available downpayment
3) rent for non-occupied units
4) Are you combining any units?

Another way to figure out what the requirements actually are, is to wade through mtge docs on ACRIS for the kinds of property you're interested in.

sledgehammer - requirements for 2 or 3 family homes vary somewhat from single family depending on the loan amount. You will have to put 25% if you want to take a high balance conforming loan up to $934,200 for 2 family homes and $1,129,250 for 3 family. If you are staying within regular conforming limits of $533,850 for 2 family the down payment can be 20%. You also have the option of an FHA loan which has the same limits $934,200 for 2 family and $1,129,250 for 3 family. The only difference in qualification is that for 3 family FHA, the home must carry itself. 75% of the total market value rent for all 3 units must cover the housing carrying costs. FHA loans allow 3.5% down. We will consider rental income for qualification purposes as well. sunny.hong@bankofamerica.com.

Shong - can you clarify?

Non-FHA but "high-balance conforming" 2 or 3 fam:
Is rental income included in determining loan-worthiness?

If you want rental income to be included but don't qualify for FHA, what kind of product is available?

Thanks.

If you are buying a primary residence 2 or 3 family and you will be renting the other unit(s) out then we can use the rental income to qualify you for your purchase. We will use 75% of the operating income statement from the appraisal report. Please feel free to email me to discuss in detail. Thanks. sunny.hong@bankofamerica.com

I think both the OP and I would like options for a 4 family home(not 2-3 family). What are the DP requirements of a conforming 4 family, both FHA and NonFHA.

Ideally i'm thinking 3 families (owner's apt + 2x 1or2bd rental) but i've seen a building Class C3 i like with owner's apt + 4x rental studios that i liked.

4 families fall into the same category as 3 families for FHA and non-FHA but the loan limits are up to $1,403,400 to stay within conforming and FHA. 25% down for conventional and 3.5% down for FHA.

Please remember on FHA 3-4 family homes, the home must carry itself and pass the self sufficiency test. 75% of the total rental market rent (all 3 or all 4 units even though you will be occupying one of them) has to cover the mortgage, taxes, and insurance. And when someone puts only 3.5% down, it's very hard to pass this test.

Very bad things happen in NYC real estate taxes when you cross from 3 units to 4. I think.

Are you talking about real estate taxes? The funny thing is that the same kind of building next door, same square footage, same early 20th century architect but only 2 families had only $4K or $5k in Real estate taxes while the one i saw w/ owner apt + 4x studios had $16.5K in yearly property taxes! (???)

Sledgehammer: that scenario happens over and over again when you cross from 3 units to 4+ in NYC. Take any random pair of identical neighboring THs in NYC, one with a 1-3 fam classification and the other with 4+. 4+ will generally have higher taxes. Also, if there has not been a signification alteration that's been detected by the Dept of Finance, the taxes on otherwise similar properties with the same tax classification will be different.

Shong: sorry to keep bugging you. So, with FHA loans, buyer income does not matter?

Sledge: the ideal situation would be to find a 1-3 fam house with the plumbing and mechanical and electrical configuration more or less how you want it AND with existing low RE taxes. That way, if work needs to be done, it can be categorized as repair and nothing that necessitates a filing with the DOB.

nyc10023, no worries. Buyer income does matter but before getting to the buyer's income it must pass the self sufficiency test first. Let me know if you have any other questions. Or you can feel free to email me.