You’ve decided that you want to purchase a multifamily house and have found the perfect place. Now you need to pay for it. Luckily, multifamily loans offer you ways to finance your new house so that you can go ahead and make the purchase. When you apply for loans, there are procedures you usually are required to follow and these differ depending on which lending institution you work with. Here’s what you need to know to get approved for your loan.

The Financial Details

Your lending institution typically wants to know that you are financially capable of taking on a loan. To get approved, you are required to submit tax returns and W-2 forms, or a business balance sheet and income statement if you are self-employed. You also usually show your credit history as well so that your lender knows you won’t default on your loan. One upfront expense you should expect is the appraisal of your new house.

When applying for loans, other financial circumstances besides income are taken into account. If you have taken out a loan in the past few years, your lender normally requests information about it to make sure you have proved trustworthy before. Your lender also examines cases of bankruptcy. If you have bankruptcy in your financial history, you are still able to qualify for multifamily loans. Loan officers typically ask about the circumstances that led to filing for bankruptcy and you will need to prove that you have been able to recover your job and financial stability. Another financial requirement of loan approval is your debt-to-income ratio. Depending on where you decide to seek your loan, this ratio varies, but usually is expected to stay beneath 45%.

Helpful Information

Multifamily loans often come with lower down payments. Some institutions allow you to use gift money as your entire down payment, while others require that at least part of your down payment come from your savings. If you plan to have a co-signer, you will want to check your lender’s policies. While some lenders allow any financially stable adult to co-sign on your loan, some request that only occupants of a house sign a loan.

Before you get approved for a loan, you will also need to give information about any real estate you currently own. Whether you plan to rent out your multi-family house or occupy part of it, your lending officer usually wants to see that you are responsible with the property already in your name.

Multifamily loans can help you purchase the house that you’ve found and fallen in love with. What you make of your property once you get approved is up to you.