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Townhouse and Small Building Financing









For a residential Townhouse, the buyer needs to qualify for the loan. Also, since rental units are counted as income, the bank gives credit for 75% of the total current rental income. Typically, a Townhouse is a great investment because the rental income received can offset the monthly mortgage payment.


Additionally, residential Townhouse mortgage rates can be as low as they are for other types of residential properties. Buyers can get up to 95% financing on these properties without Private Mortgage Insurance (PMI). Interest only products are available for Townhouses and can make the mortgage very affordable.


A bank will consider a Townhouse commercial property when it is over four units and thus causes the lending guidelines to change. The buyer in this scenario would need to put down at least 25% and the mortgage rates could be a tiny bit higher (about .375%). Furthermore, when evaluating the property, bank underwriters will put more emphasis on the building rental income rather than the actual qualifications of the buyer.


Closing costs for a New York City Townhouse can normally run between 3-4 % of the loan amount, mostly due to the 1.750% New York State Mortgage Tax that is required to be paid. However, to avoid mortgage tax, the buyer may be able to have the seller’s bank do a mortgage assignment. But, in order to accomplish this, the buyer will need to have a very talented attorney involved, as well as have the seller’s bank willing to do the assignment.


For a free pre-qualification of you and your Townhouse, please feel free to contact me.


A Townhouse is any single family to multi family building in which all the units are residential. In New York City, financing for Townhouses is much easier than financing for the typical Co-op or Condo. This is mostly due to the fact that the bank evaluation process for the Townhouse is entirely more lenient than for Co-ops or Condos (e.g., no questionnaires or building financials are required and the appraisal process does not require managing agent involvement).

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