September 12, 2024
As a first-time (or multi-time) homebuyer, you might be exploring home opportunities that provide both affordability and the potential to generate income. One such opportunity that stands out is purchasing a 2-4 unit property. With a conventional loan requiring just a 5% down payment, this type of investment can be a game-changer for your financial future.
The Opportunity
Investing in a 2-4 unit property is not only affordable but could also a strategic way to build wealth. By living in one of the units as your primary residence, you can take advantage of lower down payment requirements while generating rental income from the other units. This approach may allow you to qualify for a larger loan amount, as most lenders consider the potential rental income as part of your income.
The Benefits
One of the significant benefits of investing in a 2-4 unit property is the ability to use rental income to support your mortgage payments. This additional income can help you afford a higher monthly housing payment, making the investment more manageable and less of a financial burden. Here are a few more advantages:
- Income Generation: The rental income from the other units can offset your mortgage payments, reducing your out-of-pocket expenses.
- Wealth Building: Over time, as property values increase and you pay down your mortgage, you’ll build equity and wealth.
- Flexibility: After living in the property for at least one year, you have the flexibility to move out and rent all the units, maximizing your rental income.
Requirements
To take advantage of the 5% down payment option for a 2-4 unit property, there are a few requirements you must meet:
- Primary Residence: You must live in the property and establish one of the units as your primary residence.
- Move-In Timeline: You need to move into the property within 60 days of purchase.
- Duration of Residence: You must live in the property for at least one year before you can move out and rent all the units.
Understanding Multi-Family, 2-4 Unit Properties
A multi-family property with 2, 3, or 4 separate living units offers the best of both worlds: the potential for income generation and the benefits of homeownership. Each unit is a self-contained living space with separate entrances, kitchens, and bathrooms. While units may share common areas such as yards or driveways, the separate living spaces provide privacy and independence for each tenant.
Conclusion
For homebuyers, investing in a 2-4 unit property with a 5% down payment is a unique and lucrative opportunity. By leveraging rental income, you may qualify for a larger loan amount, afford higher monthly payments, and build wealth over time. If you’re ready to explore this investment opportunity, our team at Directors Mortgage is here to guide you through the process.1
Contact us today to learn more about how you can get started on your journey to homeownership and investment success.
1Source fanniemae.com