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Writer's pictureKCStark
2 min read

Unlocking Real Estate Potential with Fannie Mae's New 5% Down Option

Fannie Mae's New 5% Down Option Owner Occupied Multiplexes


Welcome to a new horizon in real estate and home hacking! I'm KC Stark, your proactive mortgage broker, here to dive into the groundbreaking change that Fannie Mae is bringing to the table starting November 18, 2023.



A Game-Changing Move by Fannie Mae: November 18, 2023


Fannie Mae introduces an exciting opportunity for homebuyers: a 5% down payment option for owner-occupied duplexes, triplexes, and four-plexes. This move is set to transform the way we think about purchasing and investing in property.

Unlocking Real Estate Potential with Fannie Mae's New 5% Down Option
Unlocking Real Estate Potential with Fannie Mae's New 5% Down Option

Why This Is a Big Deal


  • New Opportunities: The 5% down payment option opens the door to owning a multiplex, allowing you to live in one unit and rent out the others.

  • Lowered Startup Costs: It reduces the initial cash required to get into the housing market.

  • Increased Potential Returns: By lowering entry barriers, it enhances the potential for better investment returns.


Homeownership Plus Investment: The Perfect Combo


Imagine becoming a homeowner and a landlord simultaneously. This 5% down payment option could be your entry ticket to a home hacking lifestyle that combines the joys of homeownership with the savvy of property investment.


A Real-World Comparison


Consider the choice between a $500,000 single-family home and a duplex with similar value and loan terms:


For Both Properties:


  • Down Payment: 5% or $25,000

  • Loan Amount: $475,000

  • Interest Rate: 7% on a 30-year fixed mortgage


Single-Family Home Costs:


  • Monthly Principal & Interest: $3,159.89

  • PMI: Approximately $296.88 per month

  • Total Monthly Payment: Around $3,456.77 (excluding taxes and insurance)


Duplex Advantages:


  • Monthly Mortgage Payment: Identical to the single-family home

  • Rental Income: $2,000 from renting one unit

  • Effective Monthly Payment: Only $1,456.77 after rental income

  • Potential Savings: Rental income could be directed towards mortgage prepayment, savings, or investments


Exploring the Investment Returns


If the duplex's rental income is invested with a 5% annual return, at the end of five years, you could potentially have around $135,699.12. That's the power over time and it all start with your plans and your mortgage broker!


Fannie Mae: A Stalwart in Housing Affordability


Fannie Mae has been a cornerstone of the housing market since the Great Depression, consistently working to make housing more accessible and affordable.


A Milestone Moment for All


Whether you're a first-time homebuyer, a seasoned investor, or a dedicated real estate broker, this is an unprecedented opportunity in the housing market.


Your Proactive Step Towards Financial Growth


Have questions about how this could benefit your real estate ambitions? Be proactive and reach out! Let's carve your path to financial growth together.


Mortgage Broker Disclaimer


The information provided is for general informational purposes only and should not be construed as professional financial advice. Consult a financial professional before making any major financial decisions.


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