Property report
4 units · $700,000 · 3.5% down · rents $7,500/mo
Financial Tools
In plain English
To buy this property for $700,000 with 3.5% down, you would need about $45,500 on signing day (down payment, closing costs and repairs, minus any seller credit).
The full monthly payment — mortgage, taxes, insurance and mortgage insurance — is about $6,264. After the rent your tenants pay, the building costs you roughly $1,372 per month — compare that with what you'd pay to rent a similar home.
Before a lender is likely to say yes, you have 2 things to work on, in this order: 1. Save $5,500 more for cash to close. 2. Rents don't cover the payment for the FHA 3–4 unit test.
Your loan options (owner-occupied)
| Loan | Down | Cash to close | Monthly payment | Reserves | Savings left |
|---|---|---|---|---|---|
| FHA | 3.5% | $57,260 | $6,264 | $12,529 | -$29,789 |
| Conventional | 15% | $137,760 | $5,633 | $11,266 | -$109,026 |
| VA (eligible veterans) | 0% | $32,760 | $6,014 | $12,029 | -$4,789 |
Housing cost & lender checks
Scenario comparison
| Metric | 3% owner-occ. | 3.5% FHA | 5% owner-occ. | 10% owner-occ. | 20% investor | 25% investor |
|---|---|---|---|---|---|---|
| Eligible | No | No | No | No | No | No |
| Rate | 7.000% | 6.750% | 7.000% | 7.000% | 7.750% | 7.750% |
| Cash to close | $42,000 | $49,000 | $56,000 | $91,000 | $161,000 | $196,000 |
| PITI /mo | $6,403 | $6,150 | $6,300 | $5,883 | $5,389 | $5,138 |
| Cash flow /mo | -$1,511 | -$1,257 | -$1,407 | -$991 | $454 | $705 |
| Cap rate | 7.66% | 7.66% | 7.66% | 7.66% | 7.66% | 7.66% |
| Cash-on-cash | -43.17% | -30.79% | -30.15% | -13.06% | 3.38% | 4.31% |
| DSCR | 0.89x | 0.94x | 0.91x | 0.99x | 1.11x | 1.19x |
| IRR | 11.47% | 12.56% | 11.15% | 11.53% | 15.35% | 14.41% |
| Net sale yr 10 | $345,508 | $341,882 | $357,522 | $387,556 | $439,482 | $470,025 |
| After-tax CF /mo | -$1,405 | -$1,198 | -$1,317 | -$964 | $651 | $852 |
Qualification gaps
Sensitivity (monthly cash flow · IRR)
| Stress | 3% owner-occ. | 3.5% FHA | 5% owner-occ. | 10% owner-occ. | 20% investor | 25% investor |
|---|---|---|---|---|---|---|
| Base case | -$1,511 · 11.5% | -$1,257 · 12.6% | -$1,407 · 11.1% | -$991 · 11.5% | $454 · 15.4% | $705 · 14.4% |
| Rate +1% | -$1,976 · 7.0% | -$1,723 · 8.1% | -$1,862 · 7.2% | -$1,422 · 8.4% | $60 · 13.2% | $336 · 12.6% |
| Rate +2% | -$2,457 · 2.8% | -$2,206 · 3.8% | -$2,334 · 3.3% | -$1,868 · 5.3% | -$345 · 11.0% | -$45 · 10.8% |
| Vacancy 10% | -$1,768 · 9.0% | -$1,515 · 10.1% | -$1,665 · 8.9% | -$1,248 · 9.7% | $146 · 13.7% | $397 · 12.9% |
| Maintenance +5 pts | -$1,867 · 8.1% | -$1,613 · 9.2% | -$1,763 · 8.1% | -$1,347 · 9.0% | $98 · 13.4% | $348 · 12.7% |
| Rent growth −2 pts | -$1,511 · 8.0% | -$1,257 · 9.2% | -$1,407 · 8.0% | -$991 · 8.9% | $454 · 13.1% | $705 · 12.4% |
| All stresses | -$2,571 · -0.9% | -$2,318 · 0.2% | -$2,457 · -0.2% | -$2,017 · 2.0% | -$585 · 7.6% | -$309 · 7.8% |
Key assumptions
Financing qualification
Owner-occupant self-sufficiency (must be 1.00 or higher)
You live in one unit, so only the other 3 units count. 75% of their rent must cover the full PITIA payment (principal, interest, taxes, insurance, mortgage insurance and HOA).
Does not qualify at 3.5% down (ratio 0.78). To reach 1.00, put down 26.2% ($183,400), which lowers PITIA to $4,874/mo and needs about $158,900 more cash at closing. Alternatives: negotiate a lower price, buy down the rate, or verify higher rents.
How this purchase affects your monthly life
Lenders judge gross income. You live on take-home pay — so this is the test that matters to you.
Reserves: 6 months of your monthly budget = $29,232, on top of $45,500 for down payment and closing costs. Total savings needed: $74,732. You have $40,000 — short by $34,732.
Borrower: income, credit and payment
Monthly income $12,000 · other debts $500/mo · credit 700
- Credit score700 (≥ 580)
- Front-end DTI (PITIA ÷ income)52.2% (≤ 46.9%)
- Back-end DTI15.7% (≤ 56.9%)
- Reserves after closing$-5,500 (≥ 6 mo budget ($29,232))
Estimates for planning. Final approval depends on the lender, appraisal rent schedule and full underwriting.
Report ratio guide
Open any term for its meaning, calculation, and how to read the result.
PITI
The core monthly housing payment: principal, interest, property taxes, and insurance.
Calculation: Principal + interest + taxes + insurance.
How to read it: Mortgage insurance, HOA, maintenance, and utilities may be additional.
Front-end debt-to-income (DTI)
The proposed housing payment as a share of gross borrower income.
Calculation: Monthly housing payment ÷ gross monthly income.
How to read it: Lower leaves more income available for other obligations.
Back-end debt-to-income (DTI)
All monthly debts, including housing and allowed rent credit, compared with gross income.
Calculation: Net monthly debts ÷ gross monthly income.
How to read it: Lenders use this broader ratio for qualification limits.
Debt-service coverage ratio (DSCR)
How many times property income covers annual loan payments.
Calculation: NOI ÷ annual debt service.
How to read it: 1.00 means exact coverage; many lenders look for about 1.20–1.25 or more.
Loan-to-value (LTV)
The share of the property's price financed by the base loan.
Calculation: Base loan ÷ purchase price.
How to read it: Lower means more equity and usually less lender risk.