Multi-Family Residential Property Mortgage Loans Illinois
In this blog, we will cover and discuss multi-family residential property mortgage loans in Illinois. Chicago and its surrounding suburbs have more than two-to-four-unit multi-family homes that are owner-occupant properties than any other area in the nation. HUD, the parent of FHA, allows 2 to 4 Unit Multi-Family Residential Property Mortgage Loans Illinois with 3.5% down.
HUD Occupancy Guidelines on Multi-Family Residential Property FHA Loans
However, it only applies to owner-occupant multi-family residential property homes. It cannot be second homes or investment properties. Many heard Chicago is the murder capital of the world. Martin Blank, a senior loan officer at Gustan Cho Associates and a part-time deputy sheriff said the following:
Buying a House In Chicago and Suburbs
Dale Elenteny, a senior loan officer at Gustan Cho Associates Group, Inc. and a lifetime Chicagoan is an expert in Chicago and the suburbs. Here is how Dale Elenteny Chicago and suburbs:
Home prices are expected to decline slightly over the next twelve months but the forecast for the third quarter of 2022 is still positive (11.4%). The median home sale price in the Chicago Metro Area in July 2022 was $325,000, up 4.8 percent from $310,000 in July 2021. The region is generally defined as the area south of I-55 and the Chicago Skyway. Many of the communities immediately near Chicago continue to have an urban character while many of the southernmost communities are suburban and exurban. What is the most affordable suburb of Chicago? Elk Grove Village is one of the cheapest places to live near Chicago and popular with families and commuters. The community offers housing below the Chicago metro average with good schools and outdoor recreation.
HUD Guidelines on Multi-Family Residential Property FHA Loans
Illinois home buyers can purchase 2-to-4-unit multi-family residential property homes with FHA loans. HUD allows owner-occupant home buyers to purchase 2 to 4 Unit Multi-Family Residential Property Mortgage Loans Illinois with a 3.5% down payment.
One of the units needs to be the primary home of the multi-family property owner. The remainder residential units can be rented out. In this article, we will discuss and cover the guidelines on 2 to 4-unit multi-family homes.
What Classifies Multi-Family Residential Property Under HUD Guidelines
Any residential multi-family residential property under HUD Guidelines is a two to four-unit property that is zoned residential with no commercial space. If a property has commercial space, it is classified as mix-use and it would not be eligible for FHA Loans.
FAQs on Multi-Family Residential Property Owner-Occupant Homes
In this section, we will cover the most popular FAQs on 2-To-4 Unit Mortgage Loans. A common question I get asked by multi-family residential property home buyers is if they need to be full-time occupants of the property. The answer to that question is a definite yes. HUD requires that the owner need to occupy the 2-to-4-unit property for at least a year.
Why You Should Buy a Multi-Family Residential Property Home First
Multifamily homes are great for beginner investors because they can acquire a property with up to four separate units and start building home equity fast. A popular investment strategy many new investors take advantage of is living in one of their units while collecting rent on the others.
Can You Buy Another Primary Home And Rent Multi-Family Residential Property Home?
After one year, the owner of the multi-family property can qualify for another owner-occupant Conventional Loan. But cannot be a multi-family residential home. A multi-family residential homeowner can qualify for another owner-occupant home in one year. But needs to be a single-family home. A single-family homeowner cannot qualify for a multi-family residential property as a primary residence:
Can You Use FHA For Multi-Family Residential Property Homes?
The mission of HUD, the parent of FHA, is to make housing affordable to all Americans with less-than-perfect credit, higher debt-to-income ratios, and low down payment. They are only available to owner-occupied residential units and not second homes or investment properties. Homebuyers who are intending on purchasing 2 to 4-unit multi-family residential homes and do not intend on living there and renting out all of the four units would not qualify for the FHA multifamily Loans.
Using Rental Income To Qualify Multi-Family Residential Property Homes?
The great news for two to four-unit home buyers is that they can live in one of the units and rent out the remaining units. HUD allows 85% of the potential rental income on the rental units to be used as qualified income when lenders calculate borrowers’ debt-to-income ratios. The potential rental income figure is provided by the home appraiser.
Can I Use an FHA Loan To Buy a Multi-Family Residential Property Home?
Home buyers of multi-unit properties who intend on living in one of the apartments and renting the other units out for at least a year. If homeowners intend to vacate the property and convert all of them as rental units, it is allowed.
HUD requires owners of multi-unit properties to live in one of the units for at least a one-year period. Circumstances change and HUD realizes that if the property vacates the multi-unit prior to the one year, that will be fine.
What Does FHA Consider Multi-Family Residential Property Homes?
The four-unit multi-family homeowner might decide to move out of the multi-family residential property due to needing more space. If that is the case, they can qualify for another owner-occupant conventional mortgage. Borrowers will not be in violation of the conditions of HUD if they need to move out of their multi-family residential property after they purchase due to them needing more space due to having a new baby on the way or other extenuating circumstances.
FHA Down Payment Requirements On Multi-Family Homes
Buying a multi-family home with only 3.5% down is a great way of being a homeowner and a property investor at the same time. The rental units on multi-family homes can be used to qualify for an income. For FHA loans, 85% of the market rents can be used for debt-to-income ratios income. For conventional loans, 75% of the potential rental income can be used to qualify as income toward the debt-to-income ratios. For conventional loans, a 15% down payment is required for an owner occupant two to four-unit multi-family loans
Borrowers of 2 to 4-unit multi-family properties require reserves of principal, interest, taxes, and income. Buyers of multi-family homes can contact us at 262-716-8151 or text us for faster response. Or email us at gcho@gustancho.com. We are available 7 days a week, evenings, weekends, and holidays.
