Investors use multifamily loans to fund a multifamily property between two or four units. The property includes condos, a townhouse, apartment buildings, and portfolios of other properties. This type of loan can be short-term or long-term.
There are a few types of multifamily loan programs.
FHA issues Government-backed loans. Government-backed loans have significant benefits over other multifamily loan programs. Most importantly, they are nonrecourse. It means the lender cannot personally take recourse on other assets owned by the borrower beyond the collateralized property in the event of default.
A conventional mortgage could be a loan provided by traditional lending institutions, including a bank, bank, or non-bank lender. Conventional loans are outstanding for investors purchasing a lower-valued property with loans starting as low as $500,000. Term length will vary reckoning on the lender and standard program, which might be a shorter-term limit, like 5 to 10 years, or an extended term of up to 30.
Benefits of multifamily loans
It can generate fixed income
You may loan the unoccupied units within the property to acquire additional monthly income.
It can expand your investment portfolio.
When purchasing a multifamily property, you obtain one mortgage for the whole complex. Thus, you’ll expand your investment portfolio faster while only getting one mortgage.
Watch the video and learn more about multifamily loans.