On this page
- Minimum Down Payment for a Duplex, Triplex or Fourplex
- How the 5% Down Multifamily Rule Works on Conventional Loans
- 2026 Loan Limits for 2-4 Unit Homes
- How Rental Income Helps You Qualify
- 5% Down vs. FHA vs. Investment: A Duplex Example
- Owner-Occupied vs. Investment 2-4 Unit Loans
- Risks to Weigh Before You Buy
- 5% Down Multifamily FAQ
- Your Next Step
Yes, a 5% down multifamily purchase is allowed on a conventional loan from Fannie Mae or Freddie Mac when you live in one of the two to four units. Both Fannie Mae’s Eligibility Matrix and Freddie Mac Guide Section 4203.1 allow a 95% loan-to-value (LTV) ratio with an automated approval. FHA goes lower at 3.5% down, while VA requires no down payment for eligible borrowers.
Fannie Mae made 2-4 unit purchases eligible for 95% LTV in November 2023. Before that, its minimum was 15% down for two units and 25% for three or four. However, the 5% down multifamily option still has conditions: a loan at or under the baseline limit, an automated approval, cash reserves and limits on how rent counts.
Minimum Down Payment for a Duplex, Triplex or Fourplex
The table shows the smallest down payment each program allows when you live in one unit. “Manual” means a human underwriter approves the loan instead of Fannie Mae’s Desktop Underwriter (DU) or Freddie Mac’s Loan Product Advisor (LPA).
| Program | Down, 2 units | Down, 3–4 units | Credit score | Key condition |
|---|---|---|---|---|
| Fannie Mae, DU | 5% | 5% | No DU minimum since Nov. 16, 2025 | Loan at or under the baseline limit |
| Fannie Mae, manual | 15% | 25% | 680–700 (2 units); 660–680 (3–4 units) | Six months of reserves |
| Freddie Mac, LPA Accept | 5% | 5% | No minimum for an Accept | Loan at or under the baseline limit |
| Freddie Mac, manual | 15% | 20% | 660 | Six months of reserves |
| FHA | 3.5% | 3.5% | 580 (500–579 needs 10% down) | Self-sufficiency test on 3–4 units |
| VA | 0% | 0% | No VA minimum; lenders set one | Full entitlement |
| USDA | Ineligible | Ineligible | Not applicable | Bars income-producing property |
Sources: Fannie Mae Eligibility Matrix; Freddie Mac Guide 4203.1 (effective Oct. 7, 2026), 5203.2 and Exhibit 25; HUD Handbook 4000.1; VA Pamphlet 26-7; USDA HB-1-3555.
USDA’s guaranteed loan finances single-family homes and bars property bought mainly for income, so it doesn’t fit a duplex. In contrast, conventional loans on a one-unit home go as low as 3% for some buyers; see this guide to conventional down payments.
How the 5% Down Multifamily Rule Works on Conventional Loans
Both agencies set the same 95% ceiling, but the fine print decides whether your file gets there. For example, the 5% option requires an approval from DU or an Accept from LPA, since manual loans cap lower.
You must live in one of the units
The 95% limit applies only to a principal residence, the home you occupy as your primary residence (Fannie Mae Selling Guide B2-1.1-01). The standard Fannie Mae/Freddie Mac mortgage form asks you to move in within 60 days of closing and stay at least one year. However, the 1-4 Family Rider used on these loans deletes that clause unless you and the lender agree otherwise in writing.
Even so, the loan application asks whether you will live there, and the lender approves the loan on that answer. So plan to move in soon after closing and stay at least a year. If you later move out and keep the building as a rental, see how to rent your house and buy another.
Reserves and credit
Fannie Mae’s DU requires six months of reserves on a 2-4 unit principal residence (Selling Guide B3-4.1-01). Reserves are savings left after closing, counted in months of your full payment. Freddie Mac’s LPA, on the other hand, sets the reserves for each file on its feedback certificate, while a manually underwritten 2-4 unit loan needs six months (Guide 5501.2).
Fannie Mae also removed DU’s 620 minimum credit score on Nov. 16, 2025. Still, many lenders keep their own minimum, called an overlay, and some set a higher one for 2-4 unit homes.
Mortgage insurance
Because the loan is above 80% LTV, you will pay private mortgage insurance (PMI). The premium depends on your credit score and the insurer, so compare quotes. Later, when you build equity, you can ask to remove PMI.
HomeReady and Home Possible also allow 5% down
Fannie Mae’s HomeReady loan for lower-income buyers also allows 95% LTV on 2-4 units in DU. Similarly, Freddie Mac’s Home Possible allows 95% on a fixed-rate 2-4 unit loan. However, at least 3% of the value must come from your own funds (Guide 4501.7).
2026 Loan Limits for 2-4 Unit Homes
The 5% down multifamily option works only up to the baseline limit for the building’s unit count. Above it, the loan becomes high-balance (Fannie Mae) or super conforming (Freddie Mac). In that case, Fannie Mae caps LTV at 85% for two units and 75% for three or four, while Freddie Mac caps it at 85% and 80%.
| Units | 2026 baseline limit | 2026 high-cost ceiling |
|---|---|---|
| 2 | $1,066,250 | $1,599,375 |
| 3 | $1,288,800 | $1,933,200 |
| 4 | $1,601,750 | $2,402,625 |
Source: FHFA, Nov. 25, 2025; Freddie Mac Guide 4203.1(c). Alaska, Hawaii, Guam and the U.S. Virgin Islands have their own limits.
Check your county on the conventional loan limits page. FHFA should announce the 2027 limits in late November 2026. For FHA, the 2026 two-unit limit runs from $693,050 to $1,599,375 depending on the county (HUD Mortgagee Letter 2025-23). Also see FHA loan limits for three and four units.
How Rental Income Helps You Qualify
Rent from the other units can lower the debt-to-income (DTI) ratio your lender calculates. However, each program counts it differently.
Conventional loans count 75% of market rent
With Fannie Mae, the rent comes from the appraiser’s rent schedule (Form 1025) and any lease that transfers to you. The lender then counts 75% of the gross monthly rent on the units you won’t occupy, since the other 25% covers vacancies and upkeep (Selling Guide B3-3.8-02).
Two Fannie Mae conditions catch first-time landlords. First, the lender must document your current housing payment before it can use any rent. In addition, with less than 12 months of property management experience, the rent can only offset the property’s own payment.
For example, say the other half of a duplex rents for $1,800 a month on the appraiser’s schedule, so the lender counts 75%, or $1,350. A buyer who has never been a landlord can use that $1,350 to reduce the payment, but not as extra income. Freddie Mac also uses 75% of lease or market rent, but it adds that amount to your income (Guide 5306.1).
FHA adds a self-sufficiency test on 3–4 units
For three or four units, FHA requires the building to pay for itself on paper. Specifically, the appraiser’s market rent for all units, including yours, minus the greater of 25% or the appraiser’s vacancy estimate, must cover the full payment (HUD Handbook 4000.1).
For example, say a buyer offers $600,000 on a fourplex with 3.5% down. The base loan is $579,000, plus a financed upfront mortgage insurance premium (MIP) of 1.75%, or $10,132.50. At 7.24% for 30 years, principal and interest is about $4,015. Then add assumed taxes of $600, insurance of $300 and about $265 in monthly MIP (0.55% a year), for a payment near $5,180.
If each unit rents for $1,500, the four units bring $6,000, and 75% is $4,500. Since $5,180 is more than $4,500, the building fails. At $1,750 per unit, however, 75% of $7,000 is $5,250, so it passes. FHA also requires three months of reserves on 3–4 units, about $15,540 here.
VA counts rent only with reserves
VA counts prospective rent only when you have a reasonable chance of success as a landlord and six months of reserves (VA Lenders Handbook, chapter 4). The handbook also asks for proof of prior experience managing rentals or a property manager.
5% Down vs. FHA vs. Investment: A Duplex Example
Here is how a 5% down multifamily loan compares with FHA and an investment loan on one hypothetical duplex. For reference, NAR reported a median existing-home price of $417,500 in September 2026.
| Item | Conventional, 5% down | FHA, 3.5% down | Investment, 25% down |
|---|---|---|---|
| Down payment | $22,500 | $15,750 | $112,500 |
| Base loan amount | $427,500 | $434,250 | $337,500 |
| Upfront fee financed | None | $7,599 (1.75% MIP) | None |
| Monthly principal and interest | $2,913 | $3,011 | $2,300 |
| Monthly mortgage insurance | PMI, priced by credit (not shown) | About $199 (0.55% a year) | None |
Assumptions: $450,000 purchase price; 30-year fixed at 7.24%, Freddie Mac’s PMMS average for Oct. 29, 2026, used for all three as a purchase-rate example. FHA and investment rates differ in practice. Payments exclude property taxes, homeowners insurance and closing costs; the conventional payment excludes PMI.
The 5% option takes $6,750 more cash at closing than FHA. However, its principal and interest runs $98 lower, and you can cancel PMI later. In contrast, FHA’s annual MIP lasts the life of the loan when you put down less than 10%. Before you compare quotes, check today’s mortgage rates.
Reserves change the cash math too. On the 5% option, Fannie Mae’s six months of reserves means at least $17,478 (six times $2,913) before taxes, insurance and PMI. FHA, by comparison, requires no reserves on a two-unit home.
Owner-Occupied vs. Investment 2-4 Unit Loans
The 95% limit on a 5% down multifamily loan exists only because you live there. If you buy the same building as a rental instead, the rules tighten, as the investment property loan guide explains.
| Rule | You live in one unit | Investment property |
|---|---|---|
| Minimum down (Fannie Mae, Freddie Mac) | 5% | 25% |
| Maximum purchase LTV | 95% | 75% |
| Mortgage insurance | Required above 80% LTV | Not needed at 75% LTV |
| DU reserves | Six months | Six months, more with other financed homes |
Investment loans also carry an extra Fannie Mae loan-level price adjustment (LLPA), which lenders usually pass on as a higher rate (LLPA Matrix, Sept. 30, 2026).
Risks to Weigh Before You Buy
Rental income looks good on paper, but the building has to carry itself in real life.
- Vacancies. An empty unit still owes its share of the mortgage, so keep a vacancy fund.
- Repairs. Because roofs, boilers and plumbing serve every unit, one repair can cost a lot.
- Being a landlord. You will screen tenants, write leases, collect rent and follow your state’s landlord-tenant law.
- Lender overlays. Some lenders ask for more than the agency guides, such as a higher credit score or extra reserves. Others won’t offer 95% on three or four units at all.
For the wider picture, also see buying and living in a multi-unit property.
5% Down Multifamily FAQ
Can I buy a duplex with 5% down?
Yes, if you live in one unit and the loan gets DU or LPA approval. The loan must also stay at or under the 2026 two-unit baseline limit of $1,066,250; otherwise, the minimum rises to 15% down.
Does Freddie Mac allow 5% down on a 2-4 unit home?
Yes. Freddie Mac Guide 4203.1 allows 95% LTV on two- to four-unit primary residences with an LPA Accept. However, super conforming and manual loans cap lower, at 85% or 80%.
Can I use rental income to qualify?
Usually, yes. Lenders typically count 75% of the market or lease rent on the other units. With Fannie Mae, however, new landlords can only use rent to offset the property’s payment.
Can I buy a fourplex with an FHA loan?
Yes. FHA allows 3.5% down with a 580 score on up to four units when you live in one. However, the building must pass the self-sufficiency test, and you need three months of reserves.
Can I use a VA loan for a multifamily home?
Yes. VA allows up to four units when you live in one (38 CFR 36.4301), with no down payment for a borrower with full entitlement. Also, the funding fee on a first-use purchase with less than 5% down is 2.15% as of October 2026.
Do I need to live in the property, and for how long?
Yes. FHA requires a move-in within 60 days and the intent to stay at least one year. Conventional and VA loans also require the home to be your principal residence, so plan on at least a year there.
What about 5 or more units?
Fannie Mae and Freddie Mac single-family loans stop at four units. Instead, a building with five or more units needs a commercial multifamily loan, which follows different rules and typically needs a larger down payment.
Your Next Step
A 5% down multifamily loan works best when the rent covers a large share of the payment and you have reserves beyond the down payment. Before you make an offer, ask a lender to run DU or LPA with the expected rents and to confirm its overlays on 2-4 units. Then compare it with an FHA quote on the same building.
