If you are planning to purchase a property but need financing, an FHA multifamily loan is the best for you. An FHA multifamily loan is a Federal Housing Administration-insured mortgage that is issued by a qualified lender, such as a bank or a lending company.
But before considering FHA multifamily lenders for the desired rate, take a look first at three multifamily loan types offered by the FHA.
1. FHA multifamily acquisition loan
This type of loan is best for nearly all borrowers because it is mainly a purchase or refinancing tool for existing multifamily properties. It is indeed the most popular as they are not difficult to secure compared to FHA rehab or new construction loans.
The FHA multifamily acquisition loan requires the applicant to have no major repairs in their property. Minor repairs should be completed within a year, and the property should be built or reconstructed at least three years before the loan application.
2. FHA multifamily construction and rehab loan for rental and cooperative housing
This loan type is best for borrowers seeking to construct or renovate rental and cooperative housing units. Typically, housing types that are approved are those for the elderly, the disabled, moderate-income families, as well as single room occupancy (SRO) homes.
To apply for this loan, one must work with a Multifamily Accelerated Processing (MAP)-approved lender. A firm commitment application must be approved first before the underwriting is done. The process is cumbersome, and it may take some time before approval is made.
3. FHA multifamily construction and rehab loan for condominiums
This type of loan is best for borrowers with the aim of building or renovating condos. To apply for this loan, you have to visit your local HUD Multifamily Program Center to get application guidance.
After the meeting, a site appraisal with market analysis (for new construction)or a feasibility application (for rehabilitation) should be submitted. A commitment application through an FHA approved lender must also be submitted.
Consider your options the next time you apply for a multifamily loan from the FHA. Ask your real property agent about the requirements you need for a FHA loan.