Can I buy a 2-4 unit property with a conventional loan?
Yes. Fannie Mae buys loans on two-, three- and four-unit homes that you live in as your main home or hold as a rental, but not as a second home, which must be a single unit. Through Fannie Mae's automated system, a home you live in can go up to 95% loan-to-value (5% down), while a rental of two to four units tops out at 75% (25% down). Rent from the units you do not live in can help you qualify when it is documented the way Fannie Mae requires.
Educational answer from Mortgage Expert. Mortgage Expert's licensed loan originator is Shahram Sondi, Florida mortgage broker, Certified Mortgage Advisor™, NMLS 186790. Sources checked .
How it works
Down payment limits
Fannie Mae's Eligibility Matrix (dated August 5, 2026) sets the highest loan-to-value ratio (LTV) for loans run through Desktop Underwriter (DU). For a two- to four-unit home you live in, a purchase can go up to 95% LTV, so the minimum down payment is 5%. For a two- to four-unit investment purchase, the limit is 75% LTV, so 25% down.
High-balance loans, which are above the standard conforming limit, have lower caps on a home you live in: 85% LTV for two units and 75% for three or four units. Freddie Mac sets its own limits, lenders can be stricter, and mortgage insurance applies above 80% LTV.
Living in one unit
To count as your main home, you must move into one unit within 60 days of closing and plan to live there for at least a year. Fannie Mae counts the whole building as one financed property, not two to four.
DU requires six months of reserves on a two- to four-unit home you live in. Reserves are measured in months of the new full housing payment: principal, interest, taxes, insurance and any HOA dues (PITIA). A one-unit home you live in has no set minimum, so this is a real step up.
How rent from the other units counts
Rent from the unit you live in generally does not count. For the other units on a purchase, the lender uses the appraiser's rent schedule (Form 1025 for two to four units) and any lease you are taking over from the seller. It counts 75% of the gross rent. The other 25% allows for vacancy and upkeep.
On a home you live in, the counted rent is added to your income, and the full housing payment is counted as a debt in your debt-to-income ratio (DTI).
The landlord experience rule
Fannie Mae now asks for at least 12 months of property management experience before positive rent can be used as full income. It is usually shown on your tax return's Schedule E or by a lease at least 12 months old.
With less than 12 months, the rent can only offset the new home's housing payment. That matters if you are a first-time landlord buying a duplex.
A duplex where the buyer lives in one side
Illustrative example. This is not a real borrower, offer or quote. Values and dates are assumptions unless a program rule is identified.
Assume a buyer with more than 12 months of qualifying rental-property management experience plans to live in one unit of a duplex and rent the other. The qualifying rent evidence supports $2,000 a month. The lender verifies the experience, rental-income documentation and reserve requirement under Fannie Mae rules before counting rent.
| Item | Amount |
|---|---|
| Supported monthly rent | $2,000 |
| 75% counted for this illustration | $1,500 |
The math, step by step
- Counted rent: $2,000 × 75% = $1,500.
- The lender separately verifies the full housing expense and the required reserves. Six months of reserves means six times the applicable monthly housing expense, held in eligible assets after closing.
- The remaining 25% is $500: $2,000 × 25% = $500. That portion is not counted as qualifying rent.
Takeaway: Rental income and cash reserves are separate tests. Having enough rent does not remove the need for the required assets or the other qualifying conditions.
Easy things to get wrong
- Rent from the unit you live in generally does not count. Boarder income has its own narrow rules.
- Rent that the appraiser's schedule does not support may be cut to the lower amount.
- A lease from family or another interested party does not count when the property is not yet on your tax return.
- Six months of reserves is on top of the down payment and closing costs.
What to do next
Ask for the current leases and rent roll on any two- to four-unit listing, and estimate six months of the full housing payment for reserves.
Thinking about living in one unit and renting the others? Shahram Sondi can work out how much of the rent counts and what reserves the file needs.
Check the sources
- Fannie Mae Selling Guide B2-1.1-01: occupancy types
- Fannie Mae Selling Guide B3-3.8-01: general rental income information
- Fannie Mae Selling Guide B3-3.8-02: rental income from the subject property
- Fannie Mae Selling Guide B3-4.1-01: minimum reserve requirements
- Fannie Mae Eligibility Matrix (dated August 5, 2026)
Sources checked . Program guidance and lender requirements can change.
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Educational only. Conventional loan guidelines, lender overlays, rates, fees, PMI, LLPAs, and underwriting requirements can change. Final eligibility depends on full underwriting review. Mortgage Expert, Inc. is not affiliated with Fannie Mae, Freddie Mac, FHFA, or any government agency.
