Loan Types for Buying a 4plex

There is no single loan for buying a 4plex. The right one depends on who you are, where the property is, and whether you will live in one of the units. Below are six loan types, with who each is for, whether it fits a 4plex purchase, and its minimum down payment. Minimums are "as low as" figures from the official program pages; an individual lender can require more, so confirm your situation with a lender. Some limits depend on the property's location, such as area median income limits and rural eligibility, so check the official page for your area.

1. FHA Loan

Who it is for: First-time buyers and other buyers purchasing a primary residence.

Fits a 4plex? Yes. The FHA program covers 1-4 unit properties when you live in one of the units as your primary residence.

Minimum down payment: As low as 3.5%.

Source: HUD — FHA loans.

2. VA Loan

Who it is for: Veterans, service members, and eligible surviving spouses.

Fits a 4plex? Yes. VA purchase loans cover a home of up to 4 units, and you must live in the home you buy with the loan, which means occupying one of the units.

Minimum down payment: Typically no down payment, as long as the sales price is not higher than the home's appraised value. A VA funding fee may apply.

Source: VA — Purchase loans.

3. USDA Loan

Who it is for: Low- to moderate-income buyers purchasing in an eligible rural area.

Fits a 4plex? No. The USDA Single Family Housing Guaranteed Loan Program is for single-family homes only and cannot be used for an income-producing property, so it does not fit a 4plex purchase. It is listed here so buyers do not mistake it for a 4plex option.

Minimum down payment: No money down for those who qualify, for an eligible single-family home.

Source: USDA — Single Family Housing Guaranteed Loan Program.

4. Conventional Loan

Who it is for: Buyers purchasing a primary residence with a conventional mortgage through Fannie Mae or Freddie Mac.

Fits a 4plex? Yes. Standard automated-underwritten conventional purchases cover owner-occupied 2-4 unit properties.

Minimum down payment: As low as 5% on an owner-occupied 2-4 unit property (for comparison, 1-unit purchases can be as low as 3%). Higher down payments apply in some cases, such as high-balance properties, manually underwritten loans, and super conforming loans.

Sources: Fannie Mae eligibility matrix and Freddie Mac maximum LTV requirements.

5. HomeReady Loan (Fannie Mae)

Who it is for: Low-income buyers. Total qualifying income may not exceed 80% of the area median income for the property's location, and you do not have to be a first-time homebuyer.

Fits a 4plex? Yes. HomeReady covers one- to four-unit properties used as the borrower's principal residence, and flexible income sources, including rental and boarder income, can count.

Minimum down payment: As low as 5% on a 2-4 unit property.

Source: Fannie Mae — HomeReady.

6. Home Possible Loan (Freddie Mac)

Who it is for: Low-income buyers. Total annual qualifying income may not exceed 80% of area median income (very low-income purchases are at or below 50%).

Fits a 4plex? Yes. Home Possible is an eligible product for 2- to 4-unit owner-occupied primary residences. Rental income from the other units may count as qualifying income, and landlord education is required before the note date on purchases.

Minimum down payment: As low as 5% on a 2-4 unit fixed-rate purchase. Note: the advertised 3% down applies to 1-unit properties; on a 4plex it is 5%, and 3- and 4-unit adjustable-rate purchases require 25% down.

Sources: Freddie Mac — Mortgages for 2- to 4-unit properties and Home Possible fact sheet.

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