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Duplex Investment Property

New Rules Lower Down Payments for Multi-Unit Properties: A Game-Changer


In a significant development aimed at expanding access to credit and promoting affordable rental housing, the underwriting rules for buying two, three, and four-unit properties have undergone a transformative change. Starting in October 2023, Fannie Mae implemented new guidelines that allow for a Loan-To-Value (LTV) ratio of up to 95% for 2-4 unit properties.  The change pertains to the maximum allowable loan-to-value (LTV), combined loan-to-value (CLTV), and high combined loan-to-value (HCLTV) ratios for these multi-unit properties when purchased as principal residences. This article delves into the details of the old and new underwriting rules, explaining how they operate, and provides insights into how this shift in policy is set to revolutionize the real estate market.

Old Underwriting Rules

Before we delve into the new changes, it’s essential to understand the previous underwriting rules governing multi-unit property purchases. These rules were designed to mitigate risks associated with larger residential investments, which typically include two- to four-unit properties.

  1. Loan-to-Value (LTV) Ratios for Two-Unit Properties

Under the old rules, for a principal residence purchase of a two-unit property, the maximum allowable LTV was 85%. This meant that buyers were required to make a down payment of at least 15% of the property’s purchase price.

To illustrate, consider a duplex priced at $500,000. Under the old rules, a buyer would need to put down a minimum of $75,000 (15% of $500,000) to qualify for a mortgage.

  1. Loan-to-Value (LTV) Ratios for Three- to Four-Unit Properties

When it came to three- to four-unit properties, the old rules were even more conservative. The maximum allowable LTV for a principal residence purchase of a three- to four-unit property was just 75%.

Continuing with the example, if a triplex or fourplex were priced at $750,000, a buyer would be required to provide a down payment of $187,500 (25% of $750,000) to secure a mortgage.

New Underwriting Rules

The recent change in underwriting rules represents a significant shift in the landscape of real estate investment, especially for those looking to purchase two- to four-unit properties for use as their primary residence.

  1. Loan-to-Value (LTV) Ratios for Two-Unit Properties

Under the updated rules, for a principal residence purchase of a two-unit property, the maximum allowable LTV has been increased to a remarkable 95%. This change essentially slashes the required down payment by 10%.

Returning to our previous example of the $500,000 duplex, under the new rules, buyers can secure a mortgage with a down payment of just $25,000 (5% of $500,000).

  1. Loan-to-Value (LTV) Ratios for Three- to Four-Unit Properties

The most remarkable change is observed in the LTV ratios for three- to four-unit properties. Previously capped at 75%, these ratios have now been adjusted to 95% for principal residence purchases.

In the case of a $750,000 triplex or fourplex, this change means that buyers can now enter the market with a down payment of $37,500 (5% of $750,000).

Implications and Benefits

The new underwriting rules usher in several key implications and benefits for both homebuyers and the real estate market as a whole.

  1. Improved Access to Credit

The most evident benefit of these changes is the significantly lower down payment requirements for buyers. This makes homeownership more attainable for individuals and families looking to invest in multi-unit properties while ensuring they have a place to call home.

Lower down payments also mean that a broader spectrum of prospective buyers can enter the market, including those who may have previously found it challenging to accumulate substantial down payment amounts.

  1. Boost to Affordable Rental Housing

The increased LTV ratios for three- to four-unit properties have a direct impact on the availability of affordable rental housing. Investors can now more easily secure financing to purchase these properties, which are often converted into rental units.

This, in turn, can lead to an increase in the supply of affordable rental housing options, addressing a pressing need in many housing markets.

  1. Potential for Income Generation

Multi-unit properties offer the unique advantage of generating rental income. With the reduced down payment requirements, buyers have a better opportunity to invest in properties that can not only serve as their residence but also provide a source of income through rent.

This dual-purpose approach can help buyers build wealth and financial security over time.

  1. Diversification of Real Estate Portfolios

Investors looking to diversify their real estate portfolios can now do so with greater ease. The reduced down payment requirements mean that they can allocate capital across multiple properties, spreading risk and potentially increasing returns.

  1. Economic Stimulus

By making homeownership and real estate investment more accessible, these changes can stimulate economic activity in the housing sector. More transactions mean increased demand for housing-related services, from construction and renovation to property management.


The recent shift in underwriting rules governing the purchase of two- to four-unit properties as principal residences marks a significant milestone in the world of real estate investment. The decision to increase the maximum allowable LTV, CLTV, and HCLTV ratios to 95% is set to bring about far-reaching changes that will benefit both buyers and the broader housing market.

Under the old rules, the barriers to entry for multi-unit property purchases were high, with substantial down payments required. However, the new rules lower these barriers, making homeownership and real estate investment more accessible to a wider range of individuals and families.

Moreover, the increase in LTV ratios for three- to four-unit properties can lead to a surge in affordable rental housing options, addressing a pressing need in many housing markets. Investors can also benefit from these changes by diversifying their portfolios and tapping into the income-generating potential of multi-unit properties.

In summary, the new underwriting rules represent a welcome change that aligns with the goals of expanding access to credit, promoting affordable housing, and supporting economic growth in the real estate sector. As buyers and investors explore these opportunities, the landscape of residential real estate is poised for transformation.


For more information on how to purchase a duplex, triplex, or 4-plex with 0%, 3.5%, or 5% down please visit us at:  https://hurstlending.com/investor-loans/0-to-3-5-down-investor-loan/


In a groundbreaking move to enhance access to credit and bolster affordable rental housing, recent changes in underwriting rules have revolutionized the way buyers can invest in two-, three-, and four-unit properties for their primary residences. The maximum allowable loan-to-value (LTV), combined loan-to-value (CLTV), and high combined loan-to-value (HCLTV) ratios for these properties have been raised to 95%, significantly reducing down payment requirements. This shift has profound implications, including lower barriers to entry for buyers, support for affordable rental housing, income generation opportunities, portfolio diversification, and potential economic stimulus. Overall, these rules are set to make homeownership and real estate investment more accessible and inclusive.

About Scott Bailek

In addition to being one of the founders of Hurst Lending, I am also an attorney and real estate investor. I have a portfolio of residential and commercial properties. I have been helping our customers buy, sell, and refinance their homes since 2000. Our suite of industry-leading offers helps solve many common situations faced by homeowners and real estate investors. Have you ever experienced the frustration of trying to buy before you sell; Losing your dream home in a bidding war; Trying to obtain a No-Seasoning Cash-out loan; Being unable to get a mortgage because your new or old house needs modest repairs; or simply because you prefer using our funds to close quickly without having to liquidate other investments? Our Industry-leading suite of short-term loans solves these issues. We also offer a suite of real estate investor loan products and a full suite of conventional, VA, FHA, construction and traditional home loans.

Please feel free to contact me directly if I can help provide a loan for your next purchase or refinance, or even if you just want advice on how to get started or expand your real estate investing activities.

Scott E. Bialek
Co-Founder, Hurst Lending

*Disclaimer: This article is intended for informational purposes only and does not constitute legal, financial, or professional advice. Consult with a licensed professional before making any financial or real estate decisions.