So, you have been considering buying a duplex and having your renter make part of your house payment for you, right? Well, I am looking at the writing on the wall and seeing a change coming as more and more lenders require a minimum of 20% down payment on owner occupied duplexes.  Right now, it is possible to purchase a duplex with only 5% down, if it is owner occupied, using conventional financing, but that appears to be changing rapidly.

To begin with, buying a duplex with conventional financing and a limited down payment is currently very difficult, what with the minimum credit score and reserve requirements. Mortgage insurance is difficult to obtain even if you meet the credit requirements. So, is it too late? No, definitely not. FHA, the super hero of the mortgage industry, is there to save the day. FHA allows financing of a duplex with only 3.5% down payment, if it is just you qualifying for the loan. Things change if you need a “non-occupant” co-borrower to qualify. When that happens, the down payment can increase to 25%.

If you are a first time home buyer, you can take advantage of the tax credit even while purchasing an investment/owner occupied property. Now, I think that is pretty cool.

FHA is also more liberal regarding using the rent as additional income to qualify for the payment and having reserves on hand to cover the payment. No so with conventional financing. Additionally, additional units raise the county maximum loan limit. For instance, a single family residence in Lane County, currently has an FHA loan limit of $343,750 but a duplex loan limit is $440,050.  Three and four unit properties have some additional requirements that I would be happy to discuss in person, including reserves.

Give me a call, 541-342-7576/541-221-3455 Cell or e-mail me.

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