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6 Unit Apartment
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Cameron, James Hayes is a veteran. He is eligible to buy a four unit multifamily home with 100% financing.
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James, anything over a 4 unit you need 15% down payment and is considered multifamily commercial properties. You can buy a four unit multifamily home with a VA LOAN with 100% financing. FHA loans require 3 5% down payment and conventional loans require a 5% down payment.
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Given your strong credit score of 728 FICO and landlord experience, several loan programs may be available to you, most importantly for purchasing a 6-unit apartment building. Here are some suitable loan options and the documents gateway generally required:
Loan Programs
FHA Multifamily Loans:
Description: Loans for up to 4-6 units can be obtained under the Federal Housing Administration (FHA). These loans normally do not require a high down payment and can go as low as 3.5%.
Eligibility: At least one unit must be used as the borrower’s primary residence.
Conventional Loans:
Description: Any investment property considered for purchase, including a 6-unit apartment building, can be financed through conventional loans. However, a minimum credit score and a 20% down payment for a non-owner-occupied property are required.
Eligibility: Adequate income to pay the mortgage of the target property, properties already on rent, and good credit history qualify for conventional loans.
Commercial Real Estate Loans:
Description: Real estate loans may be suitable for a rental property the borrower does not own. Underwriting guidelines, in this case, usually differ.
Eligibility: A good business model and rent income of other properties are generally required for most lenders.
Portfolio Loans:
Description: For certain mortgage requirements, portfolio loans, as the name suggests, may be better since lenders possess such loans and do not sell them on the secondary market. These may have less strict requirements.
Eligibility: Depends on the lender; owning multiple rental properties might increase your chances.
Required Documents
No matter what kind of loan one applies for, the following standard documentation is required:
Personal Financial Statements:
Provide details regarding your assets, liabilities, income, and expenditures.
Tax Returns:
Individual’s tax returns for the previous 2 or 3 years.
Business tax returns where relevant (for rental).
Proof of Income:
The most recent pay stub or evidence of earning income.
Statements of rental income on the focused properties.
Credit Report:
The lenders will request your credit report; however, one could attach a copy for reference.
Property Information:
The set of documents concerning the 6-unit property, including all purchase papers, property listings, and any leases they may already have.
Rental History:
Proof of your experience in the rental property business, such as current rental contracts and payment history.
Down Payment Verification:
You are explaining the source of the money for your down payment using bank statements or any other evidence.
Suppose you have a credible credit score and experience with rentals. In that case, qualifying for the loan should be no problem, which will help you purchase a 6-unit apartment building. It would be sensible to reach out to a mortgage broker or a lender who deals with multifamily homes to aid you in evaluating your most suitable choices.