Down payment of owner-occupied multi-family after buying owner-occupied single family

Question

This question is about US mortgages.

I was talking to a realtor who told me that buying a single-family home now as owner-occupied would prevent me from applying for an owner-occupied mortgage for a multifamily house with a a lower down payment and suggested doing it the other way round: multi-family then single family if both are owner-occupied.

Her take is that I would not be able to put a low down-payment but instead would need to put down 25% for the 2nd place (a multi-family home) even if I lived in the single-family home for at least a year as required for owner-occupied mortgages.

Is this true? I couldn't find a source that mentions this underwriting process.

Answer 1

You seem to regard the owner-occupied rules as paperwork peccadilloes to overcome. The intent of these rules, rather, is that you indeed occupy (i.e. live in, reside in full-time) the abode that you tell a lender will be owner-occupied. To do otherwise would be to commit federal crimes such as mortgage fraud while you launch your real estate endeavor.

Answer 2

My experience is that lenders require 20% down in order to get a mortgage on a piece of rental property.

If lender will view a multifamily property as an investment property and require the 20% down payment on the loan, then you have to make sure that by putting a large down payment on the single family house you don't drain your cash and won't qualify for a loan on the multifamily property.

You should sit down with your agent and mortgage broker and determine if the order of purchases makes a difference. If it does, you may have to go with multifamily purchase first, or put a smaller amount down on the single family house.