mutifamily property

Buying a Multifamily Property in San Diego County – Duplex, Triplex, Quadriplex

Multifamily Property – Buy with only 5% down payment!

Did you know that you can buy a multifamily property with only 5% down payment? If you live in one unit, and rent out the other units, you can use an owner occupied loan to purchase!

Loan Limits for Multifamily Properties

For properties that include more than one single-family residence, the 2024 San Diego loan limit is higher:

Duplex (a home divided into two residences): $1,288,200
Triplex (3 residences): $1,557,150
Quadriplex (4 residences): $1,935,150

5% Down Payment Examples

Here are some examples of how much down payment you need, for the maximum loan (2024, San Diego County):

Duplex – borrow up to $1,288,200 – $1,356,000 purchase price, $67,800 down payment

Triplex – borrow up to $1,557,150 – $1,639,105 purchase price, $81,955 down payment

Quadriplex – borrow up to $1,935,150 – $2,037,000 purchase price, $101,850 down payment

Use Rental Income to Qualify

You can use 75% of actual rent to add to your income qualification.

For example, if the property has a two tenants who pay $2,000 each, that’s:

$4000/month rent x 75% = $3,000 qualifying income

Income Qualification – Example

If you have $8,000/month gross income and a $500 car payment. In general, your income qualification is about 45% of your gross income, minus any debt.

$8000 x 45% = $3600 minus $500 car payment = $3100

You can also use 75% of your rental income to qualify. In this example, the two renters of your future triplex pay $2,000/month each, or $4000/month total:

$4000 x 75% = $3000

$3100 work income + $3000 rental income = $6100/month total housing payment

Housing Payment Example

Quadriplex – $1,995,000 purchase price

5% down payment = $99,750

95% loan amount = $1,895,250 (falls within superconforming limits – non-jumbo)

Principal & 7.5% interest payment = $13,252 + $600 PMI + $2500 property tax and insurance = $16,352

$16,352 payment minus $9600 rental income = $6752/month payment. Similar to buying an $800,000 home, without the tax benefits of owning investment property.

Current rental income: $9600 x 75% = $7200 income towards qualification

How Do I Get Started?

The first thing to do is contact a lender to get preapproved. Then, you’ll be able to start searching for properties based on purchase price and monthly costs. As always, contact me with any questions.