Rentals and 2–4 units: how the financing changes when you’re not the only one living there.
Financing a rental differs from financing a home in down payment, pricing, and how income is counted. Living in one unit of a 2–4 unit property changes the math again, in your favor. This page sorts out the three main situations.
- Are buying a single-family or condo to rent out
- Want to “house hack” a duplex, triplex, or fourplex
- Are refinancing a rental to improve terms or pull equity
- Are deciding between conventional and DSCR financing
Which one are you?
Conventional investment loan, or DSCR.
Conventional: 15% down on a one-unit, 25% on 2–4 units, pricing adjustments for investment occupancy, and six months of reserves are typical. Expected rent, documented by lease or the appraiser’s rent schedule, counts at 75% toward qualifying. Your personal debt ratio and the number of financed properties (up to ten) still apply.
- Cheapest route when your income and credit support it
- Title in your name, not an LLC
- Alternative: DSCR if personal income is the obstacle or you want entity vesting
Owner-occupied multi-unit: the best deal in real estate financing.
Because you’ll live there, primary-residence programs apply. FHA allows 3.5% down on 2–4 units, with 75% of the other units’ rent counted as income; three- and four-unit FHA purchases must pass a self-sufficiency test (net rent covers the full payment). VA allows zero down for eligible borrowers. Conventional needs 5% down on a 2-unit and more on 3–4 confirm current agency minimums.
- You must occupy a unit for at least a year
- FHA loan limits for 2–4 units are higher than for single-family
- Reserves of a few months are commonly required
Rate-and-term or cash-out, conventional or DSCR.
Conventional cash-out on a one-unit rental is capped around 75% loan-to-value (70% for 2–4 units), with seasoning rules on recent purchases. DSCR cash-out limits are similar and qualify on rent. Either way, Florida closing costs on a new mortgage (documentary stamp and intangible taxes) are part of the break-even.
- Pulling equity to buy the next property is common; the ratio on the current one must still work after the new payment
- Leases, rent history, and insurance are the key documents
- See home equity for how the options compare
Owner-occupied triplex, with made-up numbers
A buyer purchases a $750,000 triplex with FHA at 3.5% down ($26,250). The two other units rent for $2,100 each. Underwriting counts 75% of that rent, $3,150 per month, toward qualifying income. The buyer’s own unit costs them the full payment minus what the rents offset.
The FHA self-sufficiency test for 3–4 units asks whether 75% of the rent from all units (including the one the buyer occupies, at market rent) covers the full payment. With three units at $2,100, that’s $4,725 against the payment; whether it passes depends on the rate, taxes, insurance, and MIP, which is exactly what Jared would run.
Documents for rental financing.
- Standard income and asset documents for conventional (see pre-approval)
- Leases for occupied units; appraiser’s rent schedule for vacant ones
- Two years of tax returns with Schedule E if you already own rentals
- Mortgage statements, tax bills, and insurance for every property owned
- Insurance quotes early: wind and flood premiums shape the numbers
- HOA documents for condos
- Entity documents if closing in an LLC under a DSCR loan
Common questions
How much down for a rental?
Does rent count as income?
Can I buy a rental with FHA or VA?
How many financed properties can I have?
Second home or investment property?
Tell Jared about the property and whether you’ll live in it.
He’ll lay out conventional vs. DSCR, the down payment, and how the rent counts.
- No credit pull, no obligation
- Not an application; no guarantee of approval or terms
- Rather talk? Call or text 954-649-0020
Real estate rewards people who understand the financing first.
Jared can run the numbers on a specific property before you offer.