Down Payment Help for Multiplex Buyers. Who Knew?

MHN Columnist Lew Sichelman on the hundreds of underutilized programs that help multifamily investors get their start.

Lew Sichelman

Lew Sichelman

These days, practically everyone could use a little help with their down payments and closing costs. Even folks buying their apartments instead of renting them. And in many cases, they can find help—if they know where to look.

At the start of the year, there were more assistance programs available then ever—2,351 to be exact, according to Down Payment Resource, an Atlanta-based company that tracks the field.

But assistance isn’t reserved solely for buyers of single-family houses. People who purchase condominium apartments can get in on the act, too. And in some places, so can investors/owner-occupants who want to buy a small multi-family building.

Almost all down payment assistance programs allow for the purchase of condos, according to DPR’s Rob Chrane. But nearly 30 percent (636) also cover people acquiring a duplex, a triplex and even a four-plex. There’s even a category for those buying a half-duplex in which each unit is owned separately.

DPR has assemble a comprehensive, nationwide database of home buyer assistance programs and has automated the process of matching eligible buyers and properties to these programs. It licenses its database to lenders, realty firms, multiple listing services, builders and anyone else seeking to help would-be buyers who are struggling to reach their goals. It also serves consumers directly.

Of the 636 programs, DPR says nearly 90 percent are in active funding status, meaning help is available right now. But many wanna-be owners don’t know about them, And neither do their lenders and realty agents. Worse, many of those who do know of their availability don’t want to bother with them, largely because they believe, falsely in many cases, that they involve too much paperwork and are not worth the trouble.

All of the 636 multi-unit programs cover duplexes, 429 allow triplexes and 405 cover four-plexes. And to hear Chrane tell it, these kinds properties represent a superior way for young owners to build generational wealth.

“Wouldn’t it be great if a first-time buyer’s home was a multi-family property?” Chrane told Multi-Housing News. “Think about the wealth building they could enjoy” by living in one unit and renting the others.

Residency Requirements

Of course, true investors need not apply. The rules state borrowers must reside in one of the apartments as their primary residence. But, in many cases, the income anticipated from renting the other units can be used to qualify for a mortgage.

Like assistance programs for those who buy a single-family house, the programs for purchasers of two- to four-unit buildings are varied. For example, some offer second mortgages, half of which are forgivable if the buyer meets certain requirements.

Grants are sometimes available, too, as are first mortgages. And about half the programs do not have a first-time buyer requirements, so repeat buyers are eligible.

Not every state offers this kind of help, and some states have only have one program. Others have a few, but some—like Massachusetts and New York—have dozens. Here’s some examples gleaned from DPR’s database:

  • In New York City, Neighborhood Housing Services has a program that offers first-time buyers up to $100,000 or 20 percent of the purchase price, whichever is lower. The program covers up to four-unit buildings in all of the city’s five boroughs. Depending on the borough, the price for a four-unit structure can be up to $1.2 million. Like many assistance programs, this one is aimed at low- and moderate-income buyers. Here, the buyer’s income can be no more than 80 percent of the adjusted median income for the borough.
  • People who purchase duplexes in Massachusetts’ so-called “Gateway Cities” can obtain assistance of up to $50,000 or 10 percent of the sales price, whichever is less. Elsewhere in the Bay State, the MassHousing Workforce Advantage program offers $30,000 or 10 percent. Income requirements vary by city, but in major metro areas, the limit is “well into” six figures. The program is limited to rookie buyers, but the price of the duplex can run as high as $1.03 million.
  • There is no first-time buyer requirement with the Illinois Housing Development Authority’s IHDAccess program. But there is an income limit of up to $125,000, depending on the city. Assistance runs from $6,000 to $10,000, depending on the county. And though the purchase price of a duplex is limited to $447,542, it is higher in targeted markets.
  • In the Denver area and surrounding Colorado markets, the City and County of Denver’s metroDPA Down Payment Assistance program covers properties with up to four units. A buyer’s income can be no more than $176,700, but there is no first-timer requirement.

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