If you buy a full duplex as an owner-occupant, you can finance up to 96.5% of the purchase price. As an investor, you will be lucky to get 80% financing.
Mortgages. You can have up to 4 mortgages that were set up as Owner-Occupant loans to begin with. You can move out and not have to refinance the existing loan as long as certain occupancy criteria have been met. And, you don’t have to just buy duplexes. You can buy a property that has up to 4 units and still get an Owner-occupant rate . You just have to live in it. Those are Fannie Mae Guidelines.
Title: Title has to be taken as a full duplex. The structure can’t be two half-duplexes. That distinction may take you a minute to internalize, but it is worth the time to think about it. If the title to the two sides of the duplex has been separated, lender will treat as two loans. As an owner-occupant, you can buy a 1 to 4 family residence with a mortgage. Two half-duplexes are 2 separate residences. You can only buy one property is one loan. Capiche?
If one side is already tenant-occupied, that rental income may or may not be rolled into the qualifying cashflow of buyer. However, once you own the property and have paid taxes on that income for at least one tax year, I have never had a lender NOT include it in calculating income for the next property. No lender is going to treat that cash flow the same. They will discount that cash flow in any number of ways. Expect to get credit for 60-70% of the total cash flow, less outstanding mortgage payments. But, that income can be really useful when you go to qualify for your next loan.....
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This posting is one of 5 blog postings about buying a duplex as an owner occupant. To see the others, just click on the links below:
First Time Home Buyer and a Full Duplex http://actvra.in/Byp
Single-Family Property vs Duplex...how is the search different? http://actvra.in/Byq
How To Size Up a Duplex Deal http://actvra.in/Bys
Getting a Mortgage as an Owner Occupant http://actvra.in/BxC
Misc Issues to Consider As An Owner-Occupied Duplex http://actvra.in/Byq
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