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Straight Up Chicago Investor Podcast Episode 249: Fannie Mae's Departure From Needing 25% Down On 2-4 Units

Straight Up Chicago Investor Podcast Episode 249: Fannie Mae's Departure From Needing 25% Down On 2-4 Units

The latest Tuesday Tip of the Straight Up Chicago Investor Podcast features guest Chris Puleo, who discusses a significant change in the conventional loan requirements for owner-occupied properties with hosts Tom Shallcross and Mark Ainley. 

Change in Down Payment Requirements:

  • Fannie Mae has announced a change in down payment requirements for two to four-unit properties, reducing it to as little as 5%.

  • This is a substantial shift from the previous 15% down for two-unit and 25% down for three and four-unit properties.

Impact on House Hackers:

  • The discussion emphasizes the importance of having options, especially for house hackers who were initially considering FHA with a 3.5% down payment.

  • The FHA has a self-sufficiency test for three and four-unit properties, making it challenging to pass in certain high-tax areas, potentially requiring more than 3.5% down.

Comparing Conventional and FHA:

  • Chris emphasizes the significance of comparing the 5% down conventional option with FHA, considering factors such as FICO score and overall qualifying criteria.

  • The goal is to determine which option provides the lower rate and better aligns with the individual's financial goals.

Appraisal Considerations:

  • The conversation touches on the perception that FHA appraisals are more challenging. While FHA has additional health and safety standards, conventional appraisals may result in a cleaner deal and closing.

Cash-Out Refinance:

  • The episode explores the limits of cash-out refinancing, noting that currently, it cannot exceed 80% on three and four-unit properties.

  • There is speculation about potential competition leading to higher limits in the future, but the cost implications need to be carefully evaluated.

Competition Among Lenders:

  • Mark and Tom express their optimism that competition between Fannie Mae, Freddie Mac, and FHA could lead to more favorable terms for borrowers.

  • They encourage individuals to get quotes, compare options, and ensure that loan officers provide thorough explanations of the financial

Watch Straight Up Chicago Investor Podcast Episode 249 Here

Show Notes:

Connect with Mark and Tom:

Email the Show:

Guests: Chris Puleo, Puleo Group

Link: Episode 130: Chicago Mortgage Lending in this Inflationary Environment with Chris Puleo

Chicago Investor Resources Shared

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