Whether it’s the one-room efficiency apartment that’s home to a graduate student or a large suburban garden apartment complex that houses an immigrant family, multifamily properties provide affordable housing for America’s workforce. As such, their 신용카드한도대출 performance is monitored closely by Fannie Mae.
Investors can purchase multifamily properties using a number of financing options. Choosing the best one depends on an investor’s goals and qualifications.
1. FHA
A FHA mortgage is a type of home loan that’s insured by the federal government. The program was originally designed to help borrowers with poor credit buy homes, as well as those who don’t have enough money for a larger down payment.
To qualify for a multifamily mortgage, lenders will review your credit history and income. They’ll also consider your debt-to-income ratio, which compares your monthly debt payments to your gross monthly income. This includes your monthly mortgage payments, student loans and car payments, as well as minimum payments on revolving lines of credit like credit cards.
Because the property serves as the primary collateral for repayment on multifamily mortgages, Fannie Mae and its lender servicing partners conduct significant oversight of the properties that secure these loans. This includes reviewing financial and other property-level reports on a regular basis, conducting site inspections and managing complex commercial requirements such as insurance needs.
2. Conventional
Conventional mortgages are not backed by the government and come with stricter eligibility requirements. For example, the lender will evaluate the borrower’s cash flow and debt servicing costs such as insurance, taxes and recurring mortgage payments to determine the borrower’s debt-to-income ratio.
Conventionals may be used to finance a variety of property types including garden and high-rise apartment complexes, manufactured housing communities, dedicated student housing and cooperatives. Like other loans, they are typically collateralized by the property. They are also pooled and sold as pass-through mortgage-backed securities in a well-established secondary market.
Conventional mortgages that conform to Fannie Mae and Freddie Mac loan limits are non-recourse, meaning the lender can only seize the property if you default on your loan. Non-conforming loans (also called jumbo loans) are not backed by Fannie and Freddie and carry more risk for the lenders. These loans generally require a larger down payment, higher minimum credit score and a lower DTI than conforming conventional loans.
3. CMBS
For multifamily properties that don’t qualify for a Fannie Mae, Freddie Mac, or HUD 223(f) loan, CMBS loans may provide an alternative financing option. Unlike life company loans, which lenders keep on their books, CMBS deals are securitized and sold to investors. This can lead to higher interest rates, but it also means that borrowers have more flexibility with prepayment penalties and leverage allowances.
These types of deals are known as conduit loans because they are pooled together and sold to investors through the process of commercial mortgage-backed securities (CMBS). Typically, borrowers with CMBS financing won’t deal directly with their initial lender after closing. Instead, they will work with a master servicer to collect payments and handle other administrative tasks.
CMBS loans are usually nonrecourse and assumable, meaning that if a borrower sells the property, they can transfer the debt obligation to the new owner. However, they often include significant prepayment penalties and defeasance clauses.
4. Hard Money
Like a private loan, hard money loans leverage your property’s value to provide financing. However, whereas traditional mortgage lenders dig deep into your financial background and credit history during the approval process, hard money lenders focus more on the property’s value to assess the risk. Since this is a higher-risk strategy, these loans typically have shorter lifespans and higher interest rates than conventional mortgages.
For real estate investors and property flippers, a hard money loan can provide quick financing to renovate and sell a distressed property. But they aren’t a good fit for long-term investment properties or primary residences.
Whether you’re applying for a hard money loan or another type of residential mortgage, it’s important to have an exit plan in place so that you can pay off the loan before it comes due. That includes understanding the interest rate, points (a fee of 1% of the loan value) and other costs that may be associated with the loan.