Multi-Family Loans (2–4 Units)
Finance duplexes, triplexes, and fourplexes with owner-occupied or investor terms. FHA allows 3.5% down on owner-occupied 2–4 unit properties.
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Financing 2-4 Unit Properties in Michigan
Multi-family properties — duplexes, triplexes, and four-plexes — offer Michigan investors a unique combination of owner-occupied living and rental income. The financing options available depend on whether you plan to occupy one of the units as your primary residence or purchase the property as a pure investment. These programs are available in Michigan and most other states — if you are investing outside Michigan, inquire to confirm availability in your state.
Owner-Occupied Multi-Family: FHA and Conventional Options
If you plan to live in one unit of a 2-4 unit property, you can use owner-occupied financing — including FHA loans with as little as 3.5% down. FHA loans for owner-occupied multi-family properties allow you to use projected rental income from the other units to help qualify, which can significantly increase your purchasing power. Conventional owner-occupied loans for 2-4 unit properties are also available with down payments as low as 5-15%, depending on the number of units. The key requirement is that you must occupy one unit as your primary residence.
Investment Multi-Family: Conventional and DSCR
For 2-4 unit properties purchased as pure investments (no owner occupancy), conventional investment property loans require a minimum of 25% down and a credit score of at least 680-700. DSCR loans are also available for 2-4 unit investment properties and qualify the loan based on the property's rental income rather than your personal income — ideal for investors with multiple properties or complex tax returns. For 5+ unit properties, commercial financing applies, which has different underwriting standards and loan structures.
How Rental Income Is Calculated for Qualifying
For owner-occupied multi-family purchases, lenders typically allow 75% of the market rent from the non-owner-occupied units to be counted as income in your DTI calculation. The market rent is determined by the appraiser based on comparable rental rates in the area. For investment property loans, 75% of the total rental income from all units (including the unit you would occupy if it were a rental) is used. Your loan officer will model the income calculation for your specific property to show you exactly how much rental income can be counted.
Frequently Asked Questions
Can I use an FHA loan for a duplex?
Yes. FHA loans are available for 2-4 unit properties as long as you occupy one unit as your primary residence. FHA allows as little as 3.5% down and permits projected rental income from the other units to help you qualify.
What is the maximum number of units for a conventional loan?
Conventional loans (Fannie Mae/Freddie Mac) are available for 1-4 unit properties. Properties with 5 or more units require commercial financing with different underwriting standards and loan structures.
How is rental income calculated for qualifying on a multi-family purchase?
For owner-occupied multi-family, lenders typically count 75% of the market rent from non-owner-occupied units as qualifying income. For investment properties, 75% of total rental income from all units is used. The market rent is determined by the appraiser.
Are multi-family investment loans available outside Michigan?
Yes — our multi-family investor programs are available in Michigan and most other states. If you are investing in a specific state outside Michigan and are unsure about availability, please reach out to confirm.
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