Financing Outside of Single-Family Homes

January 7, 2020

Most of the time, if you think about taking out a loan to purchase real estate, you’re likely picturing a single-family home. Depending on your needs and the properties available in the area you’re searching, though, you may find that other property types are actually a closer fit for you. Multi-family properties such as duplexes and similar units might end up being a better choice, or you could wind up shopping for a condo. You might even be in the market for a property that contains both commercial and residential aspects. Regardless of what you’re looking for, though, you should have options for financing your purchase.

Borrowing Differences

None of these property types are exactly rare, but they are outnumbered in the market by single-family dwellings. As such, the loans that you’re likely most familiar with are geared more toward those properties than properties for multiple families or dual-zoned use. Because of this, you need to be prepared for potential hurdles when you start looking for a loan. Lenders may have different requirements for these loans than they would for mortgages on a single-family unit, and some lenders may not offer loans for multi-family units or similar properties. This doesn’t mean that there are no loan options available, but you should be prepared for the possibility of a different borrowing experience.

Loan Options

When it comes down to it, many of the same options are available for purchasing multi-family units, condos and other properties as you would find when shopping for a loan for a single-family dwelling. Organizations such as the Federal Housing Administration (FHA), the Department of Housing and Urban Development (HUD) and others that are commonly used for single-family purchases also offer loan programs or insurance to cover these types of dwellings. Most local and national banks offer these loans as well, as do other mortgage lenders. With that said, you may have to meet different qualifications to get these loans than you would if borrowing to purchase a single-family home.

Qualifying for a Loan

Though specific qualifications may vary from one lender or program to the next, some of the most common items that are considered during qualification may include:

  • Larger down payments than what would typically be used for a single-family purchase
  • Reserve requirements of at least 2 percent and as high as 6 percent of the unpaid principal balance
  • For multi-family properties, a cap on the loan amount calculated on a per-unit basis
  • Minimum or maximum numbers of units within a property
  • Restrictions on any repairs that may be needed for the property

There are other qualifications that may be required by specific lenders before authorizing a loan for a condominium, multi-family dwelling or other less-common property. Depending on the property and the amount of the loan, higher credit scores, co-signers or other additional requirements may also be necessary.

Finding a Lender

As with any loan, it’s important to spend time looking for the best loan option to meet your needs. This is especially important with these types of loans, as in many cases you’ll be borrowing more than you would with a single-family mortgage and may be subject to more restrictions as well. Taking the time to explore different options and check with different lenders will help ensure that you get the best terms for your loan and will keep you from having to settle when it comes to buying the property you want.

Getting Your Loan

When you’re ready to start your loan search, HomeKeepr can help make sure that you get just the loan you need to finance the property of your dreams. By signing up for a free account you can connect with lenders and other pros who can point you in the right direction for your loan whether you’re buying a condo or an entire apartment building. Create your free account today so you can get started.

Questions? Contact Us!

Recent Posts

Care and Feeding of Your Home’s Roof

While the roof is one of the most important parts of your home, it’s also one of the most neglected. The average homeowner gives little thought to the condition or maintenance needs of their roof until it starts to leak, at which point it’s usually too late. With a little bit of care and planning, […]

Should You Rent Your Home Decor?

It might seem like kind of an odd concept, but there are a number of companies that let you rent your home décor these days. Companies like Feather and CasaOne allow you to lease your furniture and other décor for a limited period or until you decide to buy it outright. Even some older rent-to-own […]

Home Equity Loan or Line of Credit: Which is Better for You?

As you make payments against your mortgage, you build equity in your home. This equity can be used to secure future loans, making it easier to refinance your home or cover certain other expenses. Depending on your needs, you might consider taking out a home equity loan or a home equity line of credit (HELOC). […]

Signup for our newsletter

Emerald Coast Title Services, LLC
Personalized Real Estate Closing Services along the Emerald Coast since 1983
@media screen and (-ms-high-contrast: active), (-ms-high-contrast: none) { .ct-text-block, .ct-headline, .oxy-rich-text, .ct-link-text { max-width: 100%; } img { flex-shrink: 0; } body * { min-height: 1px; } }
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram