Fannie Mae Makes Multifamily Homes More Affordable with Reduced Down Payment Requirements

Blog posted On November 20, 2023

In the midst of steep home prices and high mortgage rates, Fannie Mae is making strides to create more affordable homeownership opportunities for hopeful buyers. As of November 18, 2023, it will now accept down payments as low as 5% for 2- to 4-unit owner-occupied homes. This marks a big transition from the previous 15% to 25% requirements for multifamily homes. With the new guidelines, there is a huge opportunity for home buyers looking to purchase a primary residence while still profiting from rental income.

Updated Fannie Mae down payment requirements

Who can benefit from the policy updates & how to take advantage

Some of the only exclusions that apply are high-balance and manually underwritten loans. The updates don’t exclude first-time buyers, meaning, if you haven’t owned in the past three years, you can take advantage of the lower down payment requirements and kick off your investment property portfolio. Therefore, you have a unique opportunity to reduce mortgage payments by leveraging rental income and build equity faster.

These loans aren’t limited to buyers. If you currently own a multifamily home, you can take advantage with a cash-out refinance. This will be especially beneficial as rates continue cooling throughout next year.

If you’re wondering how you can take advantage of the new updates, let us know!

*Payment example: Stated rate may change or may not be available at time of rate lock. If you bought a $700,000 home with a 30 year loan at a fixed rate of 7.875% (7.979% Annual Percentage Rate), with a down payment of 15%, for a loan amount of $595,000, you would make 360 monthly payments of $4,316.00. Payment stated does not include mortgage insurance, taxes and homeowners insurance, which will result in a higher payment.

**Payment example: Stated rate may change or may not be available at time of rate lock. If you bought a $700,000 home with a 30 year loan at a fixed rate of 7.875% (7.979% Annual Percentage Rate), with a down payment of 25%, for a loan amount of $525,000, you would make 360 monthly payments of $3,808. Payment stated does not include mortgage insurance, taxes and homeowners insurance, which will result in a higher payment.

***Payment example: Stated rate may change or may not be available at time of rate lock. If you bought a $700,000 home with a 30 year loan at a fixed rate of 7.75% (7.853% Annual Percentage Rate), with a down payment of 5%, for a loan amount of $665,000, you would make 360 monthly payments of $4,764.00. Payment stated does not include mortgage insurance, taxes and homeowners insurance, which will result in a higher payment.