Multi Family Financing: Different Financial Sources for Different Buyers

Man and woman talking to their real estate agent about multifamily financingMultifamily financing is as kind of mortgage that you can use to refinance or buy smaller multifamily units and huge apartment buildings that have several units. Multifamily mortgage loans are a great tool not only for seasoned but also for first-time investors in real estate.

Is It Right for You?

Multifamily financing is utilized as permanent financing to hold and purchase residential investment units planned to produce ongoing income. This is not suitable for temporary financial needs, like fix and flip loans for property renovation or construction loans, as it is typically for long-term gains.

Investors can utilize multi family mortgage loans to refinance assets that they already own or buy a new investment property. For instance, you can refinance your property to get a much lower interest rate, settle a hard money loan, or replace an ARM or balloon loan.

The Financial Sources

There are generally four sources for permanent multi family financing, including conventional mortgages, FNMA/FHLMC apartment mortgages, portfolio financing with banks and credit unions, and online peer-to-peer financing. Conventional mortgages are right for both new and experienced real estate investors that have strong credit profiles. They can only buy two to four unit properties, must not possess more than 10 financed properties, and it is not applicable for rehabs and construction.

Meanwhile, FNMA/FHLMC apartment mortgages are also suitable for both new and experienced investors, as long as they have strong credit profiles. They can only have five unit properties and cannot use it for rehabs or construction.

Portfolio financing with banks and credit unions, on the other hand, are for experienced investors with strong credit profiles. This is for unusual properties that don’t comply with stricter loan program requirements. They can use the program for temporary financing, rehabs, and construction. Lastly, online peer-to-peer financing is for both new and experienced investors that have average to good credit profiles. They can use it for properties similar to portfolio financing.

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Multi family financing programs are available for all investors no matter what their situation is. Determine which one is right for you and prepare all the necessary requirements.