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Florida Loan-to-Value Ratios for Two to Four Unit Properties Boosted to 95%

September 2023 marks a pivotal shift for prospective property buyers in Florida.

Properties with two to four units can now access conventional loans, having to put down just 5% of the property's purchase price.

With the Loan-to-Value (LTV) ratio now elevated to a whopping 95%, the Florida real estate market might see a spike in multi-unit property investments.

Understanding the LTV Ratios Change

The rationale behind this notable change is multifaceted. Primarily, the decision to increase the LTV (Loan-to-Value) ratios was to broaden credit access and promote affordable rental housing across Florida.

The enhanced LTV ratios now cater to two to four-unit principal residences for both purchase and limited cash-out transactions.

However, it's essential to note that this change isn't applicable to high-balance mortgage loans or loans undergoing manual underwriting.

To provide a clearer picture, here's a breakdown of the updated LTV ratios:

Number of Units Maximum LTV
1 Unit 97%
2 Units 95% (previously 85%)
3–4 Units 95% (previously 75%)

Potential Impact on Florida's Real Estate Landscape

This move towards boosting the LTV ratio is indicative of Florida's efforts to create an inclusive property market.

By reducing the initial financial barrier, a broader segment of the population may now consider investments in multi-unit properties, whether for residential purposes or as rental income sources.

For potential investors, this presents a golden opportunity. The lower down payment requirement coupled with the relatively high LTV ratio means that securing financing for such properties has become considerably more accessible.

Loan to Value Ratio

Frequently Asked Questions About Multi-Unit Financing

When considering multi-unit financing, many potential investors and buyers have questions about the process.

Here are some of the most frequently asked questions to provide clarity on this topic.

What qualifies as a multi-unit property in Florida?

In Florida, a multi-unit property refers to a real estate structure that houses two to four separate living units, each with its own individual facilities like a kitchen and bathroom.

Can first-time homebuyers in Florida avail of this 95% LTV for multi-unit properties?

Yes, first-time homebuyers in Florida can take advantage of the 95% LTV financing option for purchasing two to four unit properties.

Are there any specific income requirements for financing multi-unit properties in Florida?

Lenders typically require borrowers to have a certain income level to ensure they can manage the loan, but the specifics can vary by lender. It's crucial to check with individual lenders about their criteria.

Do I need to occupy one of the units if I purchase a multi-unit property in Florida?

Generally, for a conventional loan with a high LTV ratio, the borrower is expected to occupy one of the units as their primary residence for a certain period.

How do property taxes for multi-unit properties in Florida compare to single-unit homes?

Property taxes in Florida are determined by the assessed value of the property. Multi-unit properties might have higher taxes due to their potential for generating rental income, but rates can vary based on location and other factors.

Are there special insurance requirements for multi-unit properties in Florida?

Yes, multi-unit properties often require different insurance coverage than single-family homes, considering the multiple tenants and potential rental income. It's advised to consult with an insurance agent familiar with Florida's requirements.

What is the typical loan term for multi-unit property financing in Florida?

The most common loan term for multi-unit properties is 30 years, but shorter terms like 15 or 20 years might also be available based on the lender and borrower's preferences.

Can I refinance my multi-unit property loan in Florida?

Yes, borrowers can refinance their loans, but the conditions and rates will depend on the current market situation, the borrower's creditworthiness, and the specific lender's policies.

Are there any grants or subsidies available in Florida for multi-unit property buyers?

Florida offers various programs and incentives for property buyers, including those interested in multi-unit properties. It's beneficial to check with local housing agencies or real estate professionals to learn about current offerings.

How do interest rates for multi-unit properties compare to single-family homes in Florida?

Interest rates can vary based on multiple factors, but multi-unit properties might have slightly higher rates than single-family homes due to the perceived increased risk. However, rates are continually changing, so it's essential to consult with a lender for current rates.

Bottom Line

September 2023 ushered in a remarkable era for Florida's real estate landscape. The newly elevated Loan-to-Value ratio of 95% for two to four-unit properties makes it more attainable for a broader range of people to step into the property investment arena.

This change not only paves the way for potential homeowners and investors to access properties with a lower initial outlay but also stands as a testament to Florida's commitment to fostering an inclusive and dynamic housing market.

Whether you're a first-time buyer, a seasoned investor, or just exploring your options, understanding these nuances can shape your property acquisition strategy in the Sunshine State.

With over 50 years of mortgage industry experience, we are here to help you achieve the American dream of owning a home. We strive to provide the best education before, during, and after you buy a home. Our advice is based on experience with Phil Ganz and Team closing over One billion dollars and helping countless families.

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