Written by 5:07 am Real Estate

Buying 2-4 Unit Properties with Fannie Mae Programs

Real estate has become a lucrative avenue for wealth creation and investment in the U.S. if you seek options other than stocks and bonds. The value of properties steadily rises over time and helps you earn passive income, enjoy tax benefits, and diversify your portfolio.

When it comes to real estate, homebuyers and investors can benefit from multi-family housing options like 2-4 unit properties. A 2-4 unit property is a real estate option that offers two, three, or four separate living units, all under one building. These have their kitchens and bathrooms but share yards and driveways. A single person owns these properties, and the rental income they earn on them can help them pay off mortgage, taxes, and other expenses.

If you’re interested in acquiring a 2-4 unit home, Fannie Mae can help make your real estate investment dreams a reality. They are one of the largest providers of mortgage financing in the United States that offers several programs for you. In this blog, we will understand these housing finance options so that you can decide which option is best for you to open up investment opportunities.

Benefits of Choosing 2-4 Unit Homes

Before knowing about Fannie Mae Mortgage programs, let us understand in detail the compelling reasons to choose 2-4 unit properties:

1. Rental Income

Owning a multi-unit property allows you to generate rental income by leasing out the additional units. This supplementary income can help with your other debts and make homeownership more affordable.

2. House Hacking

Sometimes, you can live in one unit while renting out the others, a strategy often called “house hacking.” This reduces your housing costs as your tenants pay the housing mortgage while you can build your equity in the property.

3. Better Options

Some lenders offer more favorable terms for financing 2-4 unit homes. You may find it easier to secure a mortgage with lower down payment requirements, making your investment more affordable.

Mortgage Products by Fannie Mae for 2-4 Unit Homes

Fannie Mae (Federal National Mortgage Association) is a government-sponsored enterprise that plays a vital role in the U.S. housing market. It doesn’t lend to homebuyers directly but instead works to ensure liquidity in the mortgage market. By guaranteeing mortgage loans from lenders, Fannie Mae helps make homeownership more accessible to low and moderate-income borrowers.

Earlier, 2-unit home properties through Fannie Mae required a 15% down payment, and 3-4 units required a 25% down payment. This made it difficult for buyers to purchase multi-housing properties. With its latest announcement to reduce the down payment to 5% from November 18 on duplexes, triplexes, and fourplexes where the buyer lives in one of the units, the option is being considered by homeowners more than ever. A 2-4 unit is now more accessible to home buyers due to no income restrictions and an affordable 5% down payment.

Here are some of the programs from Fannie Mae that can prove valuable for you:

1. HomeReady Mortgage

HomeReady was launched in 2014 as a flexible and affordable home mortgage program by Fannie Mae. It is suitable for first-time buyers, repeat buyers, existing buyers looking for a refinance, people with limited funds for a down payment, and owners looking for rental income. 

Here are some of the eligibility criteria that you should meet to be able to use the program: 

  • The program is only for primary residences. You cannot use it for vacation homes and investment properties.
  • The program is valid for single-unit houses like condos, rowhomes, and multi-unit properties of four or fewer.
  • You must not own any additional residential properties in the country.
  • The loans should meet Fannie Mae’s conforming mortgage guidelines.
  • Your income must be less than or equal to 80% of the county’s AMI (Area Median Income). 
  • You must have a minimum credit score of 620 for multi-unit homes. Fannie Mae uses the FICO credit scoring system that ignores medical debts.
  • If you are a first-time homebuyer, you are required to attend a homeownership education class as a part of the HomeReady approval process.

2. HomeStyle Renovation Mortgage

The Fannie Mae HomeStyle Renovation Mortgage allows you to buy or refinance a home wherein loan closing costs and renovation expenses are rolled into a single mortgage. It is comparatively cheaper than personal loans and credit cards if you want to make significant repairs and renovations. The loan is suitable for any type of property, be it multi-housing properties, investment properties, or second homes.

Here are some of the eligibility criteria that you should meet to be able to use the program: 

  • The borrower should have a credit score of 620 or above
  • The DTI ratio should be less than or equal to 45%
  • The LTV should be no more than 97%
  • The borrower should have a reliable income stream and a stable job
  • The residence should be legal and suitable for all-year occupancy
  • The property should meet local standards and be secure and safe


To summarize this blog, we believe that buying a 2-4 unit property can be a smart strategy, especially when you use Fannie Mae’s various mortgage programs that can offer a wide range of benefits, like lower down payments. You can now buy a 2-4 unit with Fannie May with as little as a 5% down payment and with no income restrictions like HomeReady. However, before making a decision, understand Fannie Mae’s mortgage products in a detailed manner with the help of a qualified mortgage professional.

At Bond Street Mortgage, we have access to various mortgage sources to help you get the finest loan option. Your financial needs are our priority, and we’re here to make the loan process as straightforward as possible. Contact us today and get the mortgage advice you are looking for.

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