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Straight Up Chicago Investor Podcast Episode 249: Fannie Mae's Departure From Needing 25% Down On 2-4 Units

Mark Ainley - Saturday, December 30, 2023
Straight Up Chicago Investor Podcast Episode 249: Fannie Mae's Departure From Needing 25% Down On 2-4 Units

The latest Tuesday Tip of the Straight Up Chicago Investor Podcast features guest Chris Puleo, who discusses a significant change in the conventional loan requirements for owner-occupied properties with hosts Tom Shallcross and Mark Ainley. 

Change in Down Payment Requirements:

  • Fannie Mae has announced a change in down payment requirements for two to four-unit properties, reducing it to as little as 5%.

  • This is a substantial shift from the previous 15% down for two-unit and 25% down for three and four-unit properties.

Impact on House Hackers:

  • The discussion emphasizes the importance of having options, especially for house hackers who were initially considering FHA with a 3.5% down payment.

  • The FHA has a self-sufficiency test for three and four-unit properties, making it challenging to pass in certain high-tax areas, potentially requiring more than 3.5% down.

Comparing Conventional and FHA:

  • Chris emphasizes the significance of comparing the 5% down conventional option with FHA, considering factors such as FICO score and overall qualifying criteria.

  • The goal is to determine which option provides the lower rate and better aligns with the individual's financial goals.

Appraisal Considerations:

  • The conversation touches on the perception that FHA appraisals are more challenging. While FHA has additional health and safety standards, conventional appraisals may result in a cleaner deal and closing.

Cash-Out Refinance:

  • The episode explores the limits of cash-out refinancing, noting that currently, it cannot exceed 80% on three and four-unit properties.

  • There is speculation about potential competition leading to higher limits in the future, but the cost implications need to be carefully evaluated.

Competition Among Lenders:

  • Mark and Tom express their optimism that competition between Fannie Mae, Freddie Mac, and FHA could lead to more favorable terms for borrowers.

  • They encourage individuals to get quotes, compare options, and ensure that loan officers provide thorough explanations of the financial
    Implications.

Watch Straight Up Chicago Investor Podcast Episode 249 Here

Show Notes:

Connect with Mark and Tom: StraightUpChicagoInvestor.com

Email the Show: StraightUpChicagoInvestor@gmail.com

Guests: Chris Puleo, Puleo Group

Link: Episode 130: Chicago Mortgage Lending in this Inflationary Environment with Chris Puleo


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Author

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Mark Ainley
Investor, Managing Broker, and Property Manager
Price is what you pay, Value is what you get! I want to provide value to others and make some money along the way. I have a solid foundation in Chicago real estate because I am a Real Estate investor in both Residential and Commercial/Industrial markets while being a founding partner at GC Realty & Development LLC and co-host of Straight Up Chicago Investor Podcast. In the last 20 years we renovated 500+ properties, invested in commercial properties, managed over 7000 units/tenants, leased...
Price is what you pay, Value is what you get! I want to provide value to others and make some money along the way. I have a solid foundation in Chicago real estate because I am a Real Estate investor in both Residential and Commercial/Industrial markets while being a founding partner at GC Realty & Development LLC and co-host of Straight Up Chicago Investor Podcast. In the last 20 years we renovated 500+ properties, invested in commercial properties, managed over 7000 units/tenants, leased over 4,000 properties, featured on CNBC’s TV show The Deed, co-host on Chicago's AM560 Real Estate Revealed Radio Show, and invited to speak & sit on panels at numerous investment summits across the country. I have also been blessed with the opportunity to be a guest on over 30 top podcast platforms. GC Realty & Development, LLC, currently manages over 1,200 investment properties throughout the Chicagoland area. In 2019, 2020, 2020 and 2022, GCR&D was featured on the Inc. Magazine list of top 5,000 fastest growing companies in the United States. I take great pride in providing valued feedback to beginners and less experienced entrepreneurs on what steps not to take or what steps to take sooner in growing a younger business.
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