Looking for a Really Smart Way to Step Into Your First Home? Go Multifamily!

OK, you’re a prospective first-time home buyer! You’re probably renting. And, you may be scrimping and saving, eating rice and beans to get a decent savings in the bank. Plus you’re furiously paying off debts to get your credit score up into the 700 range, if it’s not already there.

Why? Because you want to do what everyone does. Save up 20% to buy a house. After all some have said it’s the American dream. And that’s what it’s all about, right?

Hold On a Second

What if you could own a home and have somebody else pay most if not all your mortgage? Plus, what if you did not have go for 20 percent down, but as low as 3.5 percent?

How can you do that? By purchasing a multifamily home. We’re talking about a home up to 4 units. Could be a duplex (two livable areas), triplex or quadruplex.

The only caveat is you must live in one of the units for at least a year. And your credit score? Well that can be as low as 500. Wait what?

The Many Benefits of a Multifamily Home for First-time Buyers

Yes. By choosing the multifamily route, you can flip the script. Here are some of the benefits:

• Cut down the waiting time to buy dramatically
• Slash your down payment need in less than half
• Possibly eliminate a monthly housing payment
• Benefit from any appreciation with minimal skin in the game
• Receive all the possible tax benefits as well
• Declare any current rents as income to qualify for the purchase

Incredible, right? Say you get a three-family home and you live on the first floor, and you’ve got a tenant on the second floor a tenant and the third floor, you’re golden.

You have an income source right off the bat.

Think about it, you’re making money with the mere fact that you just purchased a home.

And it is so much easier to get into than a “traditional home”.

• Less money down
• Lower qualifying credit score
• Instant side income if units are rented
• Mortgage possibly being covered by the rents

This is perfect for a single person or a couple that is currently renting. Because right now your rent money is basically going out the window. Why not make it work for you and you can always get go for that “dream home” but with a lot more leverage on your side!

Single-Family vs Multi Family Homes

The big difference is the number of residences they contain. As stated above, single-family homes have just one dwelling unit, where multi-family properties have between two and four.

Each unit within a multi-family home has its own kitchen, bathroom, utility meter, address, and entrance. This means the tenants live separate, even though they may share common walls and a roof.

Because owners of multi-family homes can rent the units out, they’re popular among real estate investors. They’re also a good choice for multigenerational families who want to live under the same roof while still having their own space.

Many of the older multifamily homes, particularly in the Northeast were built in the early to mid-1900s by families who immigrated to the United States and wanted to all live in one home.

How Can You Find Multi Unit Properties for Sale?

We can go the tech route. There are a few good tools online. You’ll want to use a heatmap, rental property finder, off market property locator, investor clubs, and of course driving around.

But it’s much better to work with a real estate agent and mortgage broker with experience. There are a lot more moving parts when buying multifamily and you’ll want to have a team of pros at your side.

To find an expert now, you can use our Find an Expert tool. You can search by location or loan officer name.

What Types of Loan Programs Are Available?

Because they’re backed by the government, FHA loans could be one of the easiest types to qualify for.

FHA loans are typically associated with first-time home buyers because they allow a minimum down payment. But FHA loans are not just for first-time homebuyers. They are just as much for someone that has owned multiple properties over the course of their life. And neither is the 3.5 percent down payment.

Plus, FHA Refinancing is Easy as Pie

Here’s another great reason to choose an FHA loan is the FHA Streamline Refinance program. That lets you easily and quickly refinance your FHA loan if rates turn back down!

Qualifying is almost an afterthought. The point is to make your monthly payment lower. Documentation is minimal. 

But again for first time buyers an FHA multifamily loan may be the easiest and smartest way to get into your new home!

Whichever Way You Go; Choose a Lender That Sees Things from Your Point of View

At Embrace, we’re proud of our extensive experience and superior customer satisfaction record. But what gives us even greater satisfaction is helping first-time buyers like you fulfill that goal of getting into your own home.

Whatever your needs and whichever way you decide to go, Embrace stands ready to provide you with the smart solutions you need to achieve your goals.