Refinancing Owner-Occupied Multi-Family Properties

Are you looking to refinance your multi-family residence?

Refinance options for borrowers with owner-occupied multi-family homes have been cut back significantly in the last year, but low mortgage refinance rates are still available for well-qualified borrowers.

Fannie Mae and Freddie Mac multi-family refinance programs have cut the maximum amount you can borrow as a percentage of your current appraised property value (called the loan-to-value ratio or LTV) down to 80% for two unit properties and 75% for three and four unit properties. These LTV limits are for rate and term refinance transactions only, where you are just paying off an existing loan and closing costs and you are not receiving any cash back.

For cash out refinance transactions through the Fannie Mae and Freddie Mac programs, borrowers can get loans up to 80% LTV for two family properties and 75% for three and four family properties (at this time the LTVs for cash out and rate-term refinances for three and four family properties are the same).

Mortgage Refinancing Options

What do you do if you do not have 20% equity for your two family refinance or 25% equity for your three or four family refinance? You have three options:

1. See if you qualify for DU Refi Plus or Freddie Mac Relief Refinance. Both of these programs were set up to help borrowers who are fully qualified except for the fact that their property lost value in the last two years. In order to qualify, however, you need to have an existing loan with Fannie Mae or Freddie Mac (go to either web site and there is a look-up tool to see if your loan is owned by either agency). If you do qualify, both agencies will now let you refinance up to 125% of the current value of your home.
2. Look at refinancing with the FHA refinance program. The FHA refinance program allows maximum LTV ratios of up to 95% for rate and term refinances and 85% for cash out refinances for owner occupied two, three and four unit properties.
3. Consider a loan modification. If you are facing a true hardship and neither FHA nor the Fannie/Freddie 125% program will work, you may qualify for a loan modification.

The credit scores required to qualify for these programs varies and as a result may determine which program you can participate in. The 125% refinance programs actually have no minimum credit score requirements, while the FHA program requires a 620 but some exceptions can be made below that score level. Freddie Mac still permits two, three and four unit refinance loans under the Freddie Mac A- Credit program, although the rates are slightly higher than standard fixed rates.

Other Second Home Mortgage Issues

Two other notes regarding owner occupied multi-family refinances. First, remember that the conforming loan limits for Fannie Mae, Freddie Mac and FHA are progressively higher for two, three and four unit properties and are higher in high-cost areas. Second, in-law set ups that are recognized by your city or town as legal conforming arrangements actually count as single family homes with an in-law set up and do not count as a two family property.

For an exact refinance rate quote for your owner-occupied multi-family, complete a free rate quote request now!.

To see the current mortgage rates, visit our Current Mortgage Rates page.

If you have any questions that you would like to get answered by our expert mortgage brokers, please email us or call us at 1-877-868-2503.

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