The low down program most single family home and duplex buyers are familiar with is FHA. This program typically allows a buyer to secure a duplex, triplex, or even a fourplex with as little as a 3.5 percent down payment.
Since the buyer has so little “skin in the game” with this form of financing, the Federal Housing Authority insures the loan for the lender by charging the buyer a monthly mortgage insurance premium at a rate of 1.75 percent of the loan amount.
A $100,000 loan, for example, would come with an annual mortgage insurance premium of $1750. Split over the course of a 12 month period, this increases the duplex buyer’s payment by $145.00 a month
U.S. Bank offers an attractive alternative to an FHA loan. The American Dream loan helps owner occupants acquire a property with just a 3 percent down payment. Better yet, there are no mortgage insurance premiums associated with this loan.
Borrowers using the American Dream program must not earn more than a certain amount, and they must buy properties in low or moderate income areas. Because we live in the midwest, most neighborhoods qualify!
While not the low down payment option of the American Dream loan or FHA, there is a conventional loan option available that requires just 15 percent down, and comes with a small second mortgage for rehab purposes.
Leverage — using a little of your money and a whole lot of the banks — is a great way to acquire investment property. And there’s few ways to do it better than to do just that than to owner occupy.