Home Buying in San Jose>Question Details

Taza Guru, Home Buyer in Sunnyvale, CA

Trying to buy a 4plex and a mortgage broker explained to me that FennieMae guidelines requires me to pay 1%

Asked by Taza Guru, Sunnyvale, CA Wed Jan 28, 2009

for investment property and 1.75% for 4plex - (both points) . Does this sound right? Has anybody been told the same? What are my options? Thanks!!

Help the community by answering this question:


Yes this does sound right if you have a lower credit score and or you are putting a small amount of money down on the four plex. When you don't put enough money down on any Fannie Mae or Freddie mac loan they want you to purchase mortgage insurance. This is to guarantee the loan if you default on it. Your options are to put more money down on the 4 plex. If you put 30% down the mortgage insurance fees should go away. But if you can't and don't want to pay the fees down grade to a duplex and put more money down.
To give you a different option on the funding I would need to know more about the project the price the income, your down payment and your income.
My first investment was a 4 plex. They are a great investment if you put enough money down to cash flow them. If you have a negative on it you had better have a large income and need a write off or it just turns into a bad investment. So you really need to know how to work the number.
If you have any further questions please feel free to contact me with out obligation.
David Rivas
(408) 431-7202
0 votes Thank Flag Link Thu Feb 26, 2009
That sounds like the rate "hits" fannie Mae Requires. There are other ways to do this, however. Seek a second opinion.

I am a mortgage broker. If I can be of service, please let me know!

Martin Smith

Precision Funding
877-238-6324 Ext 704
877-238-6324 FAX
0 votes Thank Flag Link Wed Jan 28, 2009
Taza -

I assume it is the FHA premium. Based on credit score. FHA’s upfront mortgage insurance premium will range from 1.25 percent to 2.25 percent based on borrower credit risk. Some finance it into the loan, others pay it up front.

I am not a mortgage professional and I am sure they pipe in soon.

Web Reference: http://www.TalkToCJ.com
0 votes Thank Flag Link Wed Jan 28, 2009
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