With the FHA (Federal Housing Administration) multifamily loan program of the government, you have the chance of becoming not just a property owner, but also a businessman in the real estate business. Know more about this program.
Did you know that through FHA multifamily loan program, becoming a property owner and a real estate tycoon at the same time is possible? The FHA 221d4 Loan can start you on the road to financial security. To get into the FHA 221d4 program, you need to know the basic facts.
Live and Earn
The FHA insured loans allow you the opportunity of gaining access to a broad range of home financing options. The beauty of this program is that you can get the funds you need to construct or renovate rental properties with five units or more. You can also live in one of the units and rent out the remaining units, giving you a positive cash flow every month.
After two years, you can buy another multi-unit property and occupy one of the units, while still renting out your old unit. Your credit score should not fall below 500 to increase your chances of receiving an approval. It would be even better if it scores 580 or more.
It is possible to make a down payment of 3.5 to 5 percent and avail of a market rate mortgage under the FHA 221d4 program. However, you also have to be aware that you also need to pay for mortgage insurance for the duration of the loan.
Usually, there is an upfront premium that borrowers need to pay on getting the loan. The upfront premium can be financed and made part of the total amount. There is also an annual premium, though borrowers need to pay this monthly. The amount varies and depends on the amount of the loan, the period, and the loan to value ratio.
The FHA program regards duplexes as a standard family home, and not as a multi-unit property. However, this does not prevent you from claiming the other unit of your duplex property as income, with a certain percentage removed as vacancy rate. Triplexes and 4-plexes, on the other hand, are also similarly regarded, except for one FHA rule: this states that 85 percent of your rental income must cover your principal, interest, taxes, and insurance (also known as PITI) payment obligations.
The US Department of Housing and Urban Development has more information on the FHA loan program. When you get all the facts and details you want, you can begin traversing that well-worn path that successful real estate moguls started to take. For all you know, you can become one in a few years’ time.