I wish duplex loans were like socks.
Then there would be a “one size fits all” answer to the question, “How much money do I need to put down to buy a duplex?”
The trouble is, there isn’t a universal answer. There’s actually a different answer for almost every buyer- but before I delve too far into metaphorically custom sizes, let’s start with the basics.
Broadly speaking, if you have great credit, a good job, and some money saved, the minimum down payment for a duplex is:
- 3.5 percent – If you are an owner occupant using FHA financing. You may only have one FHA loan at a time.
- 20 percent – If you are an owner occupant or investor with good credit and very little debt.
- 25 percent – If you are an investor. You must also have in reserves an amount equal to six months of payments, interest, taxes and insurance for the property. This does not have to be liquid, but can be in a retirement account.
Of course, these standards may change if you have higher debt burdens or a lower credit score. The way the bank sees it, the less perfect your credit, the higher risk you are. It isn’t that they won’t lend you money; they just want you to have a higher down payment.
Fair warning. There are many loan officers will tell you there are loans available if you are an owner occupant for as little as five percent down. If someone says this to you, be sure to make it clear to them that you are buying a multifamily property, not a single family home.
The only way to find out for certain what kind of down payment is right for you is to talk to a loan officer who has experience with duplexes, triplexes and four unit properties.
If you need a recommendation, please call. I have several qualified, reliable loan officers who would give you the answer that’s right for you.