OK, so there’s not a lot about obtaining a mortgage to buy a duplex that’s truly sexy.
But FHA’s recent decision to not only increase the mortgage insurance premiums it charges, but also to do so for the life of the loan has created an opportunity for conventional mortgages to update their look in order to attract more borrowers.
Two of the most appealing aspects of an FHA loan for owner occupant duplex buyers is the requirement for a low 3.5 percent down payment and lower credit score requirements (minimum 640).
While these sound great, the loan also comes with a 1.35 percent mortgage insurance premium, which would add $1350 a year to mortgage payments, or $112.50 a month over the life of the loan.
Recognizing how unappealing this premium may be to many buyers, conventional lenders have put on lipstick and begun offering a conventional loan for owner occupant duplex buyers that requires a 15 percent down payment with no mortgage insurance premium, and an equally low minimum credit score.
Of course, it’s a lot more difficult to come with a 15 percent down payment than 3.5 percent. However, it’s also important to note that until now, the minimum down payment for an owner occupant duplex was 15 percent.
Clearly, conventional lenders have a strong preference for single family home buyers received even better news from conventional lenders, who now offer a loan that requires a low 3 percent down payment with no mortgage insurance preimum.
With interest rates at historic lows, it remains a great time to buy a duplex, regardless of the kind of loan you use.