Attractive mortgage loans are available for multifamily properties. Whether an investor plans to buy an owner-occupied property or a non-owner occupied property, a variety of loan programs may be considered. Direct Apartment Lenders offers details about four-plex financing for real estate investors.

About Four-Plex Properties

A four-plex consists of a multifamily residential dwelling that has four separate units.

When using an apples-to-apples comparison, one-to-four unit properties are typically easier to arrange financing for versus commercial apartment buildings.

Some investors will begin their real estate journey as an owner-occupant within one of the units that houses four families.

In fact, by living in one of the units while renting out the other three units, an investor could avoid paying rent or for a mortgage, elsewhere.

Generally, this is a great way to build wealth. As long as three of the attached units are rented and will cover the mortgage, taxes, insurance for the property and maintenance costs, the owner can save money for another property -- and repeat the process. Thereafter, the owner could also rent the unit that he formally occupied.

Alternatively, an investor could buy a four-plex property with the intention of renting out all of the units.

Financing options for a four-plex are available for an investor who plans to become owner occupant and for a buyer who will be a non-owner occupant.   

FHA Loans for One-to-Four Unit Properties

The Federal Housing Administration provides low down payment loans for owner-occupied one-unit, duplex, three-unit and four-unit properties. The mortgage interest rates for FHA loans are reasonably priced for four-plex properties.

An investor who will not reside within one of the four-unit dwellings cannot obtain an FHA mortgage loan. 

Qualified borrowers can obtain an FHA mortgage loan with a 3.5 percent down payment toward the sales price 

The credit requirements are more relaxed for FHA financing, as a borrower can qualify with a credit score of 580 points or higher. However, some mortgage lenders will prefer to provide FHA financing for borrowers with at least a 620-credit score. 

Can a VA Home Loan Be Used to Buy a Four-Plex Property?

Yes!

Eligible veterans and current service members may qualify for a government-backed mortgage loan via the U.S. Department of Veterans Affairs.

A borrower would need to obtain a Certificate of Eligibility from the VA to validate his qualification for the loan guarantee.

Buying a four-plex with a VA home loan is an excellent idea.

Veterans who meet the income requirements for a four-plex may be able to purchase the property without a down payment.

An investor who buys a multifamily property with 100 percent financing could have an infinite return on the investment.  

However, an investor who plans to buy a four-plex and list the property for rent will be unhappy to learn that the VA only makes owner-occupied loans.

Borrowers who apply for a VA home loan are required to sign a document that certifies the borrower’s plan to reside within the property.

The VA does not require a borrower to have a minimum credit score to issue the mortgage loan or to qualify for the loan guarantee. Although, some lenders will require borrowers to have a 580-credit score or greater. 

Not having the money to make a 20-percent down payment or greater is one of the largest barriers to entry for new investors. 

Using a VA mortgage loan to buy a multifamily property is an excellent way for an investor to obtain the required financing without making a down payment toward the purchase price.

Conventional Financing for a Four-Plex 

Investors can use a non-government backed loan to finance the cost of a four-plex.

With conventional financing, an investor can obtain extremely competitive financing terms. 

Beyond the owner-occupancy mandate that the FHA and the VA require for four-unit properties, conventional mortgage loans that are used to finance multifamily properties may be obtained by non-owner occupants. 

Using conventional financing programs that are based on conforming underwriting guidelines, an investor may be able to obtain a mortgage loan on a one-unit, duplex, triplex or a four-plex with a 10-percent down payment toward the purchase price.

Summary

Unlike the financing options that an investor might have when speaking to an apartment lender about purchasing an apartment building with more than five units, lower down payment options may be considered for one-to-four unit properties.

Most lending programs will enable a borrower to use 75 percent of the rental income that is verified via leases for a four-plex property.

We help investors secure favorable financing terms for one-unit properties, duplexes, triplexes, four-plex properties and for multifamily apartment buildings with greater than five units.

Our nationwide support for investors who want to purchase or refinance an apartment is provided by experienced loan professionals. 

Contact Direct Apartment Lenders to inquire about loans for multifamily properties or details about financing commercial apartment buildings.