🏘️ 2–4 Unit Owner-Occupied Loans | Daily Rates LIVE

🏘️ Turn your multi-family property into a smart investment!

Join us LIVE to review Daily Mortgage Rates and explore 2–4 Unit Owner-Occupied Loans, designed for borrowers who want to live in one unit while renting out the others. Learn about loan options, eligibility, and how owner-occupancy can provide better rates and financing flexibility compared to traditional investment loans.

We’ll cover required documentation, typical down payment expectations, and tips for qualifying efficiently.

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The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages...

Transcript

Today, we’re going to take a look at our two- to four-unit owner-occupied primary homes. So this is where a borrower can occupy one unit and utilize the rent from the other units that are rented out for income purposes. So definitely a great option for our borrowers out there looking for a little bit of an alternative. Perhaps maybe still pushed out due to affordability, this would open up some other options.

So if you’d like a full breakdown, a full loan estimate, please go to our website or drop a comment here. We’d be happy to help you out. But let’s switch my screen, and we’ll check out the live rates for today. So typically, the best indicator for rates overall is going to be our ten-year Treasury yields. So these are going to basically show rates trending in general, especially when we’re talking about mortgage rates across different programs.

So you see here the last five days, we had some good news going into last week, and with all of the market turmoil over the weekend, obviously we’ve seen some increase there. But let’s take it a little bit further out. Instead of looking at the five days, we can still look at the last year and see we’re still at one-year and multi-year lows. So still a great time to be out there shopping for a mortgage, and we’re still going to be at low rates.

This might have changed a little bit from Friday, but let’s see what that actually means for our standard programs here. So these are our live rates here for a standard scenario for all of our standard programs. That way, we can compare rates across all the programs.

We set up a standard single-family home, $500,000 purchase price, $300,000 loan amount, 60% loan-to-value, 760 estimated FICO credit score, and estimated 40% debt-to-income. So we set all these options here with these basic settings so we can compare all the programs across the board. So here, we were having some pretty smoking rates last week. That was absolutely amazing.

I was expecting, if it kept trending the way we wanted, we might have been able to see some fours today, but we still have some great options. So first up here, our conventional option for our standard loan, primary borrower, 30-year fixed, which you think of when you think of a mortgage typically. Rates come in today at 5.5%. Final APR there, 5.754%. Definitely about as low as we’ve seen in the last couple of years, which is pretty amazing.

And if our customer doesn’t qualify for conventional, typically the next option we want to compare is an FHA option, which allows more leniency on credit issues and a higher overall debt-to-income ratio, but does have additional fees with the mortgage insurance upfront and yearly. So rates come in at 5%. Hopefully we’re going to see some fours here soon. And the final APR with all the fees included comes in at 5.909%.

So as usual, just a touch higher than conventional even though the rate is lower. The additional cost there with the mortgage insurance does drive the APR up a little bit. And for our VA-eligible borrowers, VA programs are absolutely amazing. Rates as low as 5.125%, and final APR there, 5.35%.

That’s much lower fees and cost there for our VA borrowers. And we have our USDA options showing some fours, which is amazing. Our standard USDA for properties that are in the USDA-eligible area and borrowers that do qualify under the income limits. These options are pretty amazing, coming in today at 4.99%. The final APR of 5.665%, with all the fees included.

So if our borrower qualifies for these options, you can see they’re a touch cheaper than FHA or conventional. So when our borrowers are comparing, this definitely could be the best option. And here’s some good news.

Our non-QM rates have gone down. So it’s been a while since we’ve seen a five there, which is pretty amazing. So non-QM allows us to go beyond the conventional, FHA, VA, USDA standard options and use alternative docs — bank statements, 1099s, P&Ls — all kinds of different options once we go into the non-QM category. So here, our 30-year fixed non-QM using bank statements or similar for our self-employed borrower comes in today at a 5.99% rate. Final APR is 6.249%.

And it does take a little bit of time for non-QM to change their rates, so they’re finally tracking down along with conventional. And our alt-doc options for investment are still the same as they’ve been the last few months here. Rates are 6.125%, lowest-rate option. Final APR there, 6.448%. And we’ll compare that to conventional.

Just a touch of change there. Conventional lowest-rate option comes in at 6.124%, just a touch lower than it’s been before. Final APR there, 6.449%. And one of our favorite options here — rates have changed here as well, which is amazing — is our DSCR.

DSCR stands for debt service coverage ratio. No income, no employment. We simply use the estimated rents from the property to determine a DSCR ratio. If the estimated rents cover the expenses, aka the property cash flows, that is a ratio over one, which is what we use for these demos. And we have a standard three-year prepayment penalty here on this first option, which is pretty standard.

Rates today come in at an amazing 5.875%, which is lower than it’s been in the last few years. Pretty amazing. Final APR there is 6.181%, lower than conventional, lower than our standard all-doc, because we’re able to add that prepayment penalty in there for those business-purpose loans.

And we can add a five-year prepay to sweeten the deal a little bit more. Rates are the same there, 5.875%, but notice the costs are a little bit lower. So the final APR comes in there at 6.096%, which is blowing conventional out of the water.

And we can always do no prepayment penalty for those states that don’t allow it or borrowers that don’t wish to have one. Rates are pretty standard there, almost identical to conventional, 6.125%. Final APR is 6.448%. And we have second mortgages, rehab loans, fix-and-flips, one-time close, all kinds of different options.

But today, we’re going to be talking about our borrowers that need a little more flexibility to perhaps purchase a multi-unit property. Also known as house hacking in some cases, if borrowers are starting their investor journey, they often may want to start out with a primary multi-unit property where they can utilize the income from the other units and still reside in one of the units.

So I found a property here just nearby me. One of the first ones that popped up here. Definitely a reasonable price. A lot of the properties that are four units and up get the price way up there, so this is a more reasonable request, I would say. A two-unit property at $699,000 allows us to get some quotes across all the different options that we have.

So notice this is a two-unit property, a duplex, and our borrower can live in one unit and rent the other unit out for income. So with this setting in mind, first we want to look at a conventional option.

Our conventional loan programs allow as low as 5% down for the purchase of a two-unit primary home, and this is going to be for that exact home. Otherwise, it’s a pretty standard conventional loan. And our borrower in this case has the same settings as we’ve set up before.

So some pretty amazing rates — 5.875%, lowest-rate option. Pretty amazing there, with 2.375 discount points. And we have options for lender credits here. If we take the rate up to 6.99%, we can even get 1% lender credit back towards closing costs. Some pretty amazing options there for conventional.

And you can see that is a 5% down payment — pretty amazing — at 95% LTV. And just a couple of other settings here: the monthly mortgage insurance under conventional, when we go 95% LTV, is going to be $188 per month for our borrower that has a 760 FICO credit score.

So that’s one of the items to consider when we compare FHA. The next option we want to look at, and typically one of the most common options for our multi-unit purchases, is going to be an FHA program. FHA allows as low as 3.5% down for a two-unit primary home.

Other than that, it’s a pretty standard FHA loan. Rates as low as 5%. Pretty amazing. That has a cost of 2.164 discount points. And we have some options for lender credits here. If we take it up to a 6% rate, we can get 0.954 — almost 1% back — in lender credits towards closing costs.

And you see here the lower down payment, that 3.5% down payment, pretty amazing here to only have to put down $24,000. And that’s the final LTV when you add in the financed mortgage insurance premium.

And the one thing I want us to note here is the FHA mortgage insurance is going to be $309 per month. So often with our higher-credit borrowers, remember, credit doesn’t change the MI cost when we’re talking about FHA. But under the conventional program, it does improve the MI. So that conventional option is probably preferable for most higher-FICO borrowers as long as the 5% down works.

Now let’s get into one of the coolest options — our VA-eligible borrowers. VA programs are pretty amazing, and we can even do a 100% loan-to-value on a two-unit or even multi-unit primary purchase.

So in this option here, we took it to the 100% max. A 5.375% lowest-rate option with a 2.142 discount-point cost. And we did find a 6.124% rate with just a slight cost there, 0.142 points — almost par.

And that is to finance the entire purchase of a two-unit property and be able to rent out the other unit. Pretty amazing there. Otherwise, it has to follow all the standard VA guidelines and, of course, has the VA funding fee included. So the LTV is actually a little bit over 100% once we finish.

But that is an amazing option and definitely great for our house hackers out there that are VA eligible. I would definitely recommend taking advantage of those VA programs if you are eligible.

And the final option for our borrowers that don’t qualify for any of the standard programs we went over — many times our self-employed borrowers — need to use alternative docs. So we can still get a fairly low down payment option for non-QM.

Here we have our non-QM 12-month bank statement option. That’s our most common request when we have a self-employed borrower that needs to use alternative docs. Bank statements are typically the easiest way to reach that goal.

The lowest down payment option for any bank statement loan is 10% down for a two-unit primary purchase, and we can still use that extra income as well. And as always, no PMI on non-QM. So you will see higher rates here, but take into account there is no additional mortgage insurance required.

Rates are a little bit higher because it’s non-QM and the lowest down payment. An 8.125% rate has a 2.475 discount-point cost, and an 8.5% rate has 1.975 discount points in cost. But we’re able to use alternative docs, still do a very reasonable 10% down payment, and still use that second unit as income.

And notice there is no mortgage insurance, PMI, or MI on our non-QM products. These are great options for borrowers that need flexibility. Obviously, this was a two-unit example, but you could do the same for three or even four units. Some underwriting does get a little more strict there, but feel free to reach out to any of our team members.

They’d be happy to give you the full breakdown for your actual quote. So thanks, everybody, for joining us. I don’t see any questions at the moment. Feel free to check out our website, themortgagecalculator.com, and we’d be happy to send you a full itemized loan estimate with all the costs, fees, and APR included for your exact example.