Support For Multifamily Homebuyers On The Rise


Programs that support ownership of multifamily properties are estimated to make up almost 30% of homebuyer assistance offerings and that may present unique opportunities in markets strapped for inventory.

According to the Down Payment Resource’s Homeownership Program Index, 33 new programs supporting multifamily homebuyers and builders were added in Q4 2022.

Multifamily programs now make up 29.3% of all available assistance offerings, a 5.5% increase over Q3 2022, according to the index.

Sean Moss, executive vice president of product and operations at Down Payment Resource, told The Mortgage Note that even first-time homebuyers can qualify for down payment assistance and become both an owner and a landlord at the same time.

Moss said the buyer receiving the assistance has to occupy one of the units, but a number of programs will allow them to purchase a duplex, triplex, or quadplex.

“You have to own and occupy one of those units, but then you have the opportunity to rent the others and cash flow those other units. So you sort of become a first-time homebuyer as well as an investor at the same time. Now, that’s going to require in almost all cases that the buyer complete a home buyer education class. And typically if they’re buying a multi-family residential property, they’re also likely to have to go through some sort of landlord training,” Moss said.

Of the 636 programs that support multifamily housing, 100% allow for two units, 67.5% allow for three units, and 63.7% allow for four units. 52.4% do not have a first-time homebuyer requirement, according to information provided by Down Payment Resource.

Moss said since housing inventory is strapped in nearly every market, they talk to lenders, listing services, real estate professionals, and consumers about alternative solutions.

Down Payment Resource partners with multiple listing services to flag properties that are eligible for assistance. That may come in the form of grants or second mortgages with varying payback provisions.

86.2% of the second mortgage programs supporting multifamily housing have deferred payments, and 59.9% are forgivable loans.

Moss said they have seen an uptick in allowances for multifamily properties dating back at least a year or two, if not longer.

“I think the biggest reason is down payment assistance providers, the municipalities, the housing finance agencies, they’re again trying to keep the door open for more buyers,” Moss said. “One way to open the door to affordability for more buyers is to expand income limits or to expand purchase price limits. Another way is to expand eligible property types.”

Although rent growth is slowing, the median U.S. asking rent rose 4.8% year over year to $1,979 in December, according to Redfin’s Rental Market Tracker.

Salt Lake City, Raleigh, Indianapolis, Cleveland, Nashville, Charlotte, Buffalo, Kansas City,  Columbus, and St. Louis were among the 50 most populous metros with the largest rent increases.

In Salt Lake City, the median asking rent rose 29.8% year over year in December, according to the rental tracker.

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