90% LTV for a 4-unit Multi-family


I am looking at a 4-unit multi-family property priced at $200K. I have excellent credit.

Would this scenario work (assuming a favorable income/expense ratio of 1.2 or greater on the multi-family):

– Transfer money from a traditional IRA to a self-directed IRA for the downpayment

– Put a 10% downpayment on the property ($20K) from the self-directed IRA and finance 90% ($180K)

– I would personally sign for the property rather than have them owned by the self-directed IRA. IRA would have a 10% interest in property and I would have a 90% interest.

I have heard that financing a 4-unit is more akin to financing a single family, than a commercial building.

Can I get a longer term loan 20-30 years because I am leary of an ARM in a rising rate environment?

What interest rate could I expect on such a deal?

Any estimate of closing costs and processing fees?

Thanks, Kayaker

Based on the parameters that you posted, you should be able to obtain 100% financing.

30 year programs are available for NOO properties. They obviously carry a higher rate than ARM products will. You will probably get an 80 /20. 80 in the 6’s. 20 could go into the double digits based on parameters.

Closing costs should be comparable to a normal conforming (residential) loan.

Make sure that you shop around.

More importantly, what do the cash-flow numbers look like??

Personally, I’m not in favor of using one’s retirement funds for REI but people do. This is a personal opinion and may not represent the “conventional wisdom” of the majority herein assembled.

Have you broached the idea of the current owner holding a second?


The initial investment into your new property would be similar to the costs you would see with traditional financing. But just like any long term loan, it may be better to use points in buying down your rate.

I am not quite sure I understand what you meant about the IRA having a 10% interest. In residential financing an individual qualifies off their own credit and you would own 100% interest.

There are programs out there to get you 100% financing on this type of scenario. Although the rate goes up as the lenders risk goes up.

In order to determine your rate, you would be better served to have a preapproval completed. With the limited information available here, just throwing out a rate would not the right thing to do. The 6% range you were given before is a broad figure. One question would be if a prepayment is required. In most cases no, but a better rate can be achieved by opting for one. Remember, that as mortgage consultants, we can balance your interest rate along with the costs for you to get the perfect loan for that property.