A Game-Changing Policy for Multi-Family Buyers
In one of the most significant housing finance updates in recent years, Fannie Mae has rolled out a policy that could transform how buyers enter the real estate investment market.
Effective November 18, 2023, Fannie Mae now allows qualified borrowers to purchase or refinance owner-occupied 2- to 4-unit properties with just a 5 % down payment — a dramatic reduction from the previous 15 %–25 % minimum.
This groundbreaking policy applies to:
- Standard home purchases
- No cash-out refinances
- HomeReady® and HomeStyle® Renovation loans for owner-occupied properties
Why This Change Matters
Previously, buying a duplex, triplex, or fourplex required substantial upfront cash. For many aspiring investors and first-time buyers, the 15 %–25 % down payment was simply out of reach.
Now, with just 5 % down, homeownership — and investment — becomes attainable for a much larger pool of buyers.
This policy also eliminates the FHA “self-sufficiency test”, a rule requiring projected rental income to cover PITI (Principal, Interest, Taxes, and Insurance) — a hurdle that prevented many borrowers from qualifying under FHA multifamily programs.
With Fannie Mae’s update, buyers can use anticipated rental income to help qualify without having to meet strict self-sufficiency ratios. (Source: HousingWire)
How the 5 % Down Program Works
To qualify for the Fannie Mae 5 % down multifamily program:
- The property must be owner-occupied (you must live in one unit).
- You can finance 2-, 3-, or 4-unit properties.
- You must have a current housing expense (rent or mortgage).
- Rental income from other units can be used to qualify.
- Loan must be a conforming loan — not high-balance.
2024 conforming loan limits:
| Units | Maximum Loan Amount |
|---|---|
| 2 units | $960,300 |
| 3 units | $1,160,730 |
| 4 units | $1,442,600 |
(Source: FHFA Loan Limits 2024)
Benefits of Fannie Mae’s New 5 % down multifamily Policy
This update offers a range of benefits for homebuyers and small-scale investors alike:
1️⃣ Lower Barriers to Entry
Only 5 % down means more buyers can afford to purchase multi-unit homes — ideal for first-time buyers or families looking to offset their mortgage with rental income.
2️⃣ No Self-Sufficiency Test
Unlike FHA multifamily loans, Fannie Mae no longer requires projected rental income to fully cover PITI, making qualification far easier.
3️⃣ Conventional Financing Advantages
Borrowers access conventional loan rates and underwriting standards, which can mean lower mortgage insurance costs and simpler appraisal requirements compared to FHA.
4️⃣ Build Equity While Earning Income
Owner-occupants can live in one unit and rent out the others, using rental income to offset mortgage payments while building long-term equity.
Who Qualifies for the Fannie Mae 5 % down multifamily Program?
This program is a strong fit for:
- First-time buyers entering the market through “house hacking.”
- Borrowers with steady housing history looking to move from renting to owning.
- Owner-occupants wanting to leverage rental income to qualify.
- Buyers seeking a smaller multi-unit property as a stepping stone to larger investments.
If you meet these requirements, the Fannie Mae 5 % down multifamily option could be your fastest path to becoming both a homeowner and an investor.
How This Impacts the Market
This new policy is expected to boost demand for 2- to 4-unit properties, which could lead to:
- Higher property values and faster sales for sellers
- Increased investment in small multifamily housing
- Broader participation in real estate wealth building by first-time buyers
In short, Fannie Mae’s 5 % down program democratizes real estate investing — making multifamily ownership accessible to everyday buyers, not just seasoned investors.
Steps to Get Started
- Check Eligibility: Confirm you meet the occupancy and credit requirements.
- Get Pre-Approved: Work with a lender experienced in Fannie Mae Conforming Loans.
- Identify a 2-4 Unit Property: Focus on neighborhoods with strong rental demand.
- Use Rental Income to Qualify: Your lender can include projected rent from additional units.
- Close and Move In: Live in one unit, rent the others, and start building equity immediately.
Final Thoughts
Fannie Mae’s 5 % down payment policy for multifamily homes represents a major leap forward for accessibility and affordability in real estate.
For first-time buyers and aspiring investors, this program removes the barriers that have long made multi-unit ownership feel out of reach. With minimal down payment requirements, no self-sufficiency test, and access to conventional loan terms, the dream of owning and profiting from a duplex, triplex, or fourplex is now within grasp.
At Ybarra Commercial Group, we help buyers evaluate financing options, analyze rental income potential, and identify the right properties for long-term success.
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