How to Qualify For Multifamily Loans
When you purchase a duplex or a home with multiple units, you have many financing options available to you. One of these, naturally, is a traditional mortgage. However, because you’re planning to live in this house as well as rent out the other units, your choices go beyond the ones to which you’re accustomed. In your situation, you can also qualify for multifamily loans from the Federal Housing Administration and Veterans Affairs. The big question, then, is how to qualify for these different types of funding.
Federal Housing Administration
In order to qualify for a multifamily loan from the FHA, typically you need to prove that you have a sound financial history. Lenders may ask to see past tax returns and your credit history to see that you have a stable source of income and pay your bills on time, as these factors will indicate that you’re a lower investing risk. Occasionally, the FHA considers loan applicants who are still paying on bankruptcies or who have filed for bankruptcy within the past few years. In these cases, you usually are still required to meet their financial guidelines and demonstrate both your newly founded credit history and job stability. The amount of money you can qualify for depends on what state and county you live in; regardless of location, the typical down payment is 3.5%, making FHA loans appealing to many.
Veterans Affairs
If you’re a veteran, you may choose to obtain a loan from the VA. Those who wish to qualify for a VA loan must first receive an eligibility certificate. This certificate explains your military service and is usually submitted online at the beginning of the application process. VA multifamily loans are about the least expensive kind of loan you will encounter but they do still come with a funding fee that you pay once up front. The amount of this fee depends on how much you choose as a down payment. VA loans do not actually require a down payment; however, you may choose to pay one because it would bring down the cost of the funding fee. A 10% down payment, for example, means you would pay a funding fee of 1.25% of your borrowed amount. As with traditional loans, you still are required to show that your job brings in enough money to pay the loan back, and your credit score is taken into account as well.
When it comes to multifamily loans, your options are numerous. Your choice depends on which route is the best one for you. Look into all of your choices before you make a decision so that you can decide with as much information as possible.
