6 Steps to Apply for an FHA Loan for Multifamily 4 Units with 3.5% Down

An FHA multifamily loan is a multifamily mortgage, insured by the Federal Housing Administration, and provided by the FHA-approved lenders. These loans are used to buy properties with maximum 4-units and are subject to FHA loan limits and qualifications. And you can get the loan with as low as a 3.5% down payment.

Are you looking for an FHA loan multifamily 4 Units with 3.5% down payment? Then, opt for a reputable FHA-approved lender today. But before that take a look at the steps to apply for the home loan program-

  • Choose an FHA approved lender 

You already have a property in mind to purchase. This is a little different than buying a residential property where you can get pre-approved before you actually find a property. You should have the basic details about the property, including the address, taxes, rent rolls, occupancy rate, and approximate expenses. You can get in touch with an FHA-approved lender, discuss the property details, and decide if you want to work with him or her or not.

  • Fill out the application 

Just think you want to work with a lender, they will ask you for some financial information and check your credit, although it is not as vital as in other loan programs as it is a non-resource loan. They will also ask you to gather any required documents like proof of income, tax returns, etc. But the lender is much more concerned to know whether the property meets FHA guidelines and makes enough rental income to pay back the loan. The lender will turn in all these documents for review.

  • Qualify for a firm commitment 

The Multifamily Hub or Program Center will review your application in order to determine whether the proposed loan is an acceptable risk. At the same time, FHA does an underwriting analysis for determining if enough rental income is available to repay the loan. Later, they will order an appraisal and inspection that you’re responsible for paying for. Moreover, they will also look at the existing market needs for housing and the borrower qualifications to make a decision.

  • Issuing mortgage commitment 

If your loan application meets the multifamily program’s requirement of FHA, they will issue a commitment to the lender for mortgage insurance.

  • Clearance from lender 

Once the FHA approved the loan, the lender will finish up any paperwork that they may have, order the title insurance, finish any outstanding inspections, and will give a closing date.

  • Settlement 

In this step, the lender will wire the funds to the title company and you bring a certified check or wire your down payment to the title company. Once all documents are signed and security deposits change hands, you will get the keys to your new property.

You can consider this real-life example, where a house was sold on 12/13/2019 at 3714 Gager St, Houston, TX 77093 for $450,000 with 6 bedrooms and 6 bathrooms and the total size of the MultiFamily of 4 Units home is 3,564 Sq Ft. With FHA Loan Multifamily 4 Units, the down payment would be only 3.5% or $15,750 and the loan amount is $ 258,138 and the cash to close including closing costs could be $12,009.01.

So, if you are convinced with the step-by-step process and the real-life example given above, start looking for a home, then lender and apply for the loan program as early as possible. Your dream home will soon become a reality.

Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.