Fannie Mae permits up to 95% loan-to-value (LTV) for eligible purchases and limited cash-out refinances of two- to four-unit primary residences through Desktop Underwriter. For a Florida buyer, that can mean 5% down on a duplex, triplex or fourplex while living in one unit. Investment properties, high-balance loans and manual underwriting follow different limits.
Key Takeaways
- Live in one unit: The 95% option applies to an eligible primary residence, not a property rented entirely to tenants.
- Budget beyond 5%: Closing costs and reserves are separate from the down payment.
- Document the rent: Expected rental income must meet underwriting and verification requirements.
- Check the loan category: High-balance, investment and cash-out financing have lower LTV limits.
The down payment is only part of the budget for these property types. You also need eligible funds for closing, required reserves and a loan file that supports your income, credit and property. Bennett Capital Partners Mortgage Brokers prepared this guide to explain those distinctions and help you compare Florida 2-4 unit loan options.
Fannie Mae Mortgage Guidelines for 2-4 Unit Properties
These multi-unit properties contain two, three or four residential units. Financing the whole building is different from buying one condo within a larger project. Five or more units require a different financing category.
Property Eligibility Matrix
| Occupancy and transaction | Maximum LTV | Important condition |
|---|---|---|
| Primary residence: purchase or limited cash-out refinance | 95% | Standard DU underwriting |
| Primary residence: cash-out refinance | 75% | Separate cash-out requirements |
| Investment property: purchase or limited cash-out refinance | 75% | Applies to both duplexes and 3-4 units |
| Investment property: cash-out refinance | 70% | Separate cash-out requirements |
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These are agency maximums for standard eligible properties, not loan approvals. The Fannie Mae Eligibility Matrix and its footnotes control. Manufactured housing and special transactions have separate rules.
High-Balance Loans and Manual Underwriting
The 95% ceiling does not extend to high-balance mortgages or manually underwritten files. For eligible primary-residence purchases and limited cash-out refinances, those categories allow up to 85% on two units and 75% on three or four units. High-balance loans require DU. A lender may impose stricter requirements.
Desktop Underwriter, or DU, is Fannie Mae’s automated underwriting system for mortgage loans. The lender remains responsible for its underwriting decisions. An eligible recommendation does not replace verification of the application, property review or satisfaction of the findings.
Owner Occupancy, Investment Properties and Refinancing
Owner-Occupancy Requirements
You must occupy one of the units as your principal residence to use the owner-occupied option. Renting the other units is compatible with that use. Tell the lender how you actually plan to use the property; occasional personal stays do not establish a principal residence.
Investment Property Requirements
If you will rent every unit and live elsewhere, the property is an investment property. The 85% investment limit sometimes quoted for a duplex is incorrect: that standard purchase limit belongs to a one-unit investment property. Fannie Mae’s second-home category also permits only one unit.
Limited Cash-Out vs. Cash-Out Refinancing
A limited cash-out refinance generally restructures existing financing under limits on permitted proceeds and costs. It is not the same as borrowing a large additional amount for personal use. Ask the lender to classify the transaction before relying on an LTV maximum. Compare the new payment, closing costs, mortgage insurance and remaining term, not just the interest rate.
Down Payment, Closing Costs and Six Months of Reserves
How the 5% Down Payment Works
For an ordinary purchase, LTV uses the lower of the sales price or appraised value. On a $600,000 purchase appraising at $600,000, a 95% loan is $570,000 and the down payment is $30,000. If the appraisal is only $580,000, the same LTV produces a $551,000 loan. Paying the original price would then require $49,000 toward the price, before closing expenses.
For a standard two- to four-unit primary-residence purchase above 80% LTV, the borrower generally must contribute 5% from their own funds. Eligible gifts can supplement that contribution. A documented shared-residency gift exception exists; HomeReady follows separate contribution rules. Have the lender review the donor, transfer and source before relying on a gift.
A Practical Cash-and-Reserves Example
DU requires six months of reserves for a two- to four-unit principal residence and can require more. Reserves are eligible assets remaining after closing. PITIA includes principal, interest, taxes, insurance and applicable association dues. Mortgage insurance must also be included when applicable.
- Down payment: $30,000 on the illustrative $600,000 purchase.
- Closing expenses: Assume $15,000 solely for this example. Actual charges, prepaid items and credits differ.
- Reserves: With assumed monthly PITIA of $4,500, six months equals $27,000.
That is $45,000 for the down payment and assumed closing expenses, before deposits or credits, plus $27,000 retained as reserves. The total asset-planning figure is $72,000; it is not all cash paid at closing. The same dollars cannot fund the down payment and remain available as reserves. These figures are illustrations, not a quote.
Borrower Eligibility: Credit Score, Income and DTI
Fannie Mae’s current credit policy does not impose a fixed minimum credit score on DU loan casefiles. DU evaluates the credit profile and overall risk. That does not mean credit is ignored, or that every lender accepts every score. Lender and mortgage-insurer requirements can be more restrictive.
The debt-to-income ratio, or DTI ratio, compares qualifying monthly debt obligations with qualifying gross monthly income. DU permits a maximum of 50%, but a file below that ceiling can still be declined. Include the full housing payment, other debts and properly calculated rental income. Avoid new borrowing before closing because changed debts or income may require another review.
Qualifying After Bankruptcy
The standard Chapter 7 or Chapter 11 waiting period is four years from discharge or dismissal. For Chapter 13, it is two years after discharge but four years after dismissal. Documented extenuating-circumstance exceptions have separate requirements; dismissal does not automatically qualify for a two-year wait. Re-established credit and the rest of the loan qualifications still matter.
Our mortgage preapproval guide explains the initial credit review. Provide the actual court records so the lender can determine the applicable dates.
Using Rental Income to Qualify for a 2-4 Unit Mortgage
How Much Rent Can the Lender Count?
For eligible long-term rents documented through leases or market rent, the calculation generally starts with 75% of gross rent to allow for vacancy and maintenance. For example, $2,000 in eligible monthly rent starts at $1,500 after that adjustment. Do not include rent from the unit you will occupy.
That starting figure is not an automatic addition to qualifying income. Housing-payment history, property-management experience, documentation and the transaction determine what can be used. For a principal residence, the full PITIA remains in monthly obligations and permitted rental income is handled under the qualifying-income rules. Simply subtracting advertised rent from the mortgage payment can produce an incorrect DTI.
September 2026 Rental-Income Update
Fannie Mae’s September 2, 2026 update permits immediate early implementation and requires the revised rental-income rules for applications dated on or after December 1, 2026 (the revised implementation date in Fannie Mae’s September 23, 2026 reissue of SEL-2026-08). During the transition, ask the lender which rules apply to your application.
Under the revised long-term rental rules, a documented current housing payment and at least 12 months of property-management experience are needed to use positive adjusted rental income beyond offsetting the property payment. Without the required experience, use may be limited to offsetting PITIA; without a documented current housing payment, rental income cannot be used. The lender must apply the complete rule to your file.
Expect requests for executed leases, evidence supporting the lease terms and the appraisal’s rental analysis. Newly executed leases within two months of application have a minimum six-month term under the revised rules. Refinances can also require tax-return rental history. Short-term rentals have separate calculations; do not apply the long-term 75% assumption to projected vacation-rental revenue.
The general rental-income requirements, subject-property rules and implementation announcement explain the distinctions.
2026 Florida Conforming Loan Limits for 2-4 Units
Loan limits apply to the mortgage amount, not the purchase price. Miami-Dade, Broward and Palm Beach use the baseline limits shown below. Monroe County has higher county limits.
| Property | Baseline limit | Monroe County limit |
|---|---|---|
| 2 units | $1,066,250 | $1,267,600 |
| 3 units | $1,288,800 | $1,532,200 |
| 4 units | $1,601,750 | $1,904,150 |
Source: FHFA’s 2026 county loan-limit list. In Monroe County, a loan above the baseline but within the higher county limit is high-balance and does not receive the standard 95% LTV treatment. Confirm the county, unit count and loan amount before estimating the down payment.
Mortgage Products: Standard Financing, HomeReady and HomeStyle
| Mortgage program | Who it may fit | Key distinction |
|---|---|---|
| Standard conforming | An eligible owner-occupant buying or refinancing 2-4 units | No HomeReady-style income ceiling |
| HomeReady mortgage | An eligible owner-occupant within the program’s income limit | Qualifying income cannot exceed 80% of area median income |
| HomeStyle Renovation | An eligible owner-occupant financing a purchase or refinance with renovations | Renovation scope and property must meet program requirements |
The eligible DU ceiling for these two- to four-unit primary-residence transactions is 95%, subject to the matrix exceptions. HomeReady’s advertised 3% down option does not turn a fourplex into a 97% LTV transaction. For HomeReady purchases above 80% LTV, the borrower ordinarily needs a 3% own-funds contribution; grants have separate rules. That contribution is distinct from the total down payment.
HomeStyle’s investment-property option is restricted to one unit. Do not assume it can finance renovations on a non-owner-occupied duplex or fourplex. Compare Fannie Mae conventional mortgage options with the separate FHA 2-4 unit guidelines if you are considering both programs.
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ADUs and Appraisal Requirements
An ADU Is Not Automatically Another Residential Unit
An accessory dwelling unit provides independent living facilities on the same property. Its classification depends on the appraisal and applicable eligibility rules, not just a listing description or an extra kitchen. Ask about zoning, permits and the appraiser’s unit classification before assuming a property qualifies.
The older appraisal framework permits one ADU with a one-unit dwelling and excludes ADUs on two- to four-unit properties. Under the newer UAD 3.6 rules, eligible two- or three-unit principal residences may include ADUs if the combined total does not exceed four. That expanded policy applies to loans sold on or after March 31, 2026 using UAD 3.6. Four units plus an ADU exceed that limit.
The UAD 3.6 supplement is therefore essential when reviewing an ADU scenario. Confirm the lender’s appraisal framework and all property conditions rather than relying on the older rule alone.
Plan for a Property Appraisal
Two- to four-unit properties are ineligible for Fannie Mae’s value acceptance, commonly called an appraisal waiver. The lender needs the applicable appraisal and rental analysis. A low value, material property issue or unsupported unit count can change financing or prevent approval. The broader appraisal-waiver guide should not be read as an exception for this property type.
Prepare Your Florida 2-4 Unit Loan File
- Identify the property. Provide the address, unit count, intended occupancy and any ADUs or planned renovations.
- Build the full budget. Separate the down payment, closing expenses and retained reserves. Request property-specific insurance estimates.
- Document income and rent. Supply the income records requested by the lender, leases, rental history and evidence of relevant management experience.
- Confirm the underwriting path. Ask about DU, baseline versus high-balance treatment, lender overlays and appraisal requirements.
- Compare written terms. Review the rate, points, mortgage insurance, monthly payment and cash to close on matching assumptions.
A lower down payment preserves cash, but it can also increase the loan balance and mortgage-insurance expense. Test the payment against your own budget with room for repairs and vacancy, even when the lender approves the loan. Bennett Capital Partners can review Florida scenarios. For property outside Florida, contact a mortgage professional authorized to serve that location.
Frequently Asked Questions
Can I buy a Florida fourplex with 5% down?
Potentially, if you occupy one unit and the loan meets the standard DU, property and borrower requirements. Closing costs and reserves are additional. The option does not apply to a fourplex purchased solely as an investment.
Are there income limits for the 95% LTV program?
Standard conforming financing has no HomeReady-style income ceiling. HomeReady limits qualifying income to 80% of the applicable area median income. Both require sufficient documented income to qualify.
What reserves do I need?
Plan for at least six months of PITIA for a DU-underwritten two- to four-unit principal residence. DU or the lender may require more. Reserves must remain after the funds needed for closing are deducted.
Is a 640 or 660 credit score always required?
No. Current Fannie Mae DU policy has no fixed minimum score, but the lender or mortgage insurer may impose one. Ask about the requirements for your specific file rather than relying on a universal score threshold.
Can I use this program for a second home or investment property?
The 95% owner-occupied option requires a principal residence. A property rented entirely to tenants follows investment rules. Fannie Mae’s second-home category is limited to one-unit properties, unlike a duplex, triplex or fourplex.
Can I refinance at 95% LTV?
An eligible standard limited cash-out refinance of a two- to four-unit primary residence can qualify. Cash-out, high-balance and manually underwritten loans follow lower limits and additional conditions.
Is private mortgage insurance required?
Mortgage insurance is generally required at 95% LTV. Fannie Mae normally requires it above 80% unless another permitted form of credit enhancement applies. Ask how the premium affects your payment and closing costs.
Does 95% LTV mean I can get a 95% second mortgage?
No. LTV describes the first mortgage relative to property value. A second lien also affects combined LTV, or CLTV. A home equity line can affect HCLTV, which accounts for its full line amount. Separate subordinate-financing rules apply.
Can an appraisal waiver replace the 2-4 unit appraisal?
No. These properties are ineligible for Fannie Mae value acceptance. The lender must review the applicable appraisal, property condition and rental information.
Can a non-occupant co-borrower help me qualify?
An eligible non-occupant co-borrower may participate in a DU loan with LTV up to 95%. DU considers that person’s income, assets, liabilities and credit along with the other borrowers. This does not remove the property, occupancy or other loan requirements.
Does Fannie Mae lend directly to buyers?
Fannie Mae purchases or securitizes eligible mortgages originated by lenders. You apply through a mortgage lender or broker; Fannie Mae’s standards do not guarantee that a lender will approve the application.
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