Special offer

Small down payments on multi-family homes

Mortgage and Lending with Cambria Mortgage NMLS 274132

Minneapolis, MN: Dream of buying a multi-family home, like a duplex, living on one side, and renting out the other?

It's a pretty common thought, and something I personally did in my early years. It was great. The rented side paid about 95% of my monthly mortgage payment. Meaning I was building equity, and essentially living free.  How cool is that?

Until recently, the only small down payment option to buy a multi-family home, and live in one unit was an FHA loan loan, which required only a small 3.5% down payment.

While there is absolutely nothing wrong with an FHA home loan, there are some positives and negatives about this option. One negative being primarily that an FHA loan does have a more stringent requirement for the condition of the home.  For example, if the home is older than 1978, ANY peeling paint on the property needs to be repaired prior to your closing on the home.  This would seem minor, but you'd be surprised how many times a seller is unwilling to fix something.

The other major FHA issue on tri-plex, and four-plex units, was a 'self-sufficiency' test that sometimes created hurdles to this loan.

That left buyers on some homes without a low down payment option, as Fannie Mae and Freddie Mac previously required anywhere from 15% down on a duplex, to 25% down on a four-plex.

Enter The Fannie Mae 5% Down Option

As of November 2023, Fannie Mae changed their mutli-family home down payment guidelines to require just 5% down, helping to ensure more options for more people to become owner occupant landlords.

For owner occupant landlords, this policy shift is seen as a big plus, and represents more opportunities to reduce housing costs for home buyers by leveraging positive rental income, and make multifamily homes more accessible to more people. 


Cambria Mortgage, the Joe Metzler Team lends in CO, FL, IA, MN, ND, SD, and WI. To see if you qualify, we simply need you to complete a no cost, no obligation online application. You can call (651) 552-3681,  or schedule an appointment for a phone, office, or Zoom appointment right online, or for faster service, simply complete an online application.

Cambria Mortgage

Cambria Mortgage, NMLS 274132. Serving #Minnesota #Wisconsin #Iowa #NorthDakota #SouthDakota #Colorado #Florida.

This is not an offer to lend or to extend credit, nor is this a guaranty of loan approval or commitment to lend. Information here can become out of date, and may no longer be accurate. Products and interest rates are subject to change at any time due to changing market conditions. Not all programs available in all states. Actual rates available to you may vary based upon a number of factors. Consumers must independently verify the accuracy and currency of available mortgage programs. All loan approvals are subject to the borrower(s) satisfying all underwriting.


Patricia Kennedy
RLAH@properties - Washington, DC
Home in the Capital

Here a lot of the historical townhouses have basement apartments. I have one at my house, and it is providing an important part of my income. The local landlord/tenants loans make it a little daunting, so tenant screening becomes important. So does staying in compliance with the local laws for property rentals.

Apr 09, 2024 09:14 AM
Michael Elliott
Fathom Realty - Burlington Township, NJ
Burlington, New Jersey Residential Sales

Great information here, Joe.  Thank you for sharing it!

Apr 09, 2024 09:33 AM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

This is a great opportunity for First Time Buyers to increase their purchasing power ! …

Apr 09, 2024 12:30 PM
John Pusa
Glendale, CA

Hello Joe Metzler very valuable helpful report about small down payments on multi family homes.

Apr 09, 2024 05:21 PM
Richard Weeks
Dallas, TX
REALTOR®, Broker
Great information, thanks for sharing.  I hope you have a great day.
Apr 10, 2024 05:40 AM