10 Ways To Finance Your Minneapolis Duplex
If you’ve been dreaming of having your tenant pay most of your mortgage, you’re in the right place. Financing a duplex is the ultimate “house hacking” cheat code. But for it to work, you have to finance it right.You might be thinking, “It will take me forever to save 20% for a down payment.” Here’s the good news. You may not have to.
Here are 10 ways to snag those keys and start building your empire:
1. The FHA Low Down Option (3.5% Down)
This is often a great start for first-timers. You can buy a duplex with just 3.5% down. The catch? You have to live in one side for a year. It’s the easiest way to go from “renter” to “owner” without a massive pile of cash. Check the FHA requirements to see if you qualify.
2. VA Loans: Nothing Down
For veterans and active-duty service member, the VA loan is literally unbeatable. $0 down payment. No private mortgage insurance (PMI). You can buy a duplex, live in one half, and start your real estate journey with nothingout of pocket.
3. Conventional “House Hacking” (5% Down)
Think you need 20% for a conventional loan? Think again! Thanks to new rules from Fannie Mae and Freddie Mac, owner-occupants can often put down as little as 5%. It’s a great way to avoid some of the stricter FHA appraisal rules.
4. The 203(k) “Fixer-Upper” Special
Found a duplex that needs work? The FHA 203(k) loan lets you wrap the purchase price and the renovation costs into one mortgage. You get a shiny, updated duplex and instant equity! A few words of warning. You will likely need to have a licensed contractor do the repairs. Also, the approval process on this loan is longer than most. Be prepared to hurry up and wait.
5. DSCR Loans: It’s All About the Math
If you don’t want the bank digging through your personal tax returns, DSCR (Debt Service Coverage Ratio) loans are your best friend. The lender cares more about whether the duplex’s rent covers the mortgage than what you make at your 9-to-5.
6. Seller Financing
Sometimes the best bank is the person selling the house. You negotiate terms directly with the seller—maybe a lower interest rate or a flexible down payment. It’s a win-win for a seller who wants steady income and tax savings without the landlord headaches. Fair warning. I have yet to meet a seller willing to carry a note for 30-years. Most have a payoff clause that requires the buyer to refinance and pay the seller off in 2-5 years.
7. Hard Money: The Fast-Track
When a deal is too hot to wait for a 30-day bank closing, hard money lenders step in. These are short-term, high-interest loans used to bridge the gap until you can refinance into something more permanent.
8. Use Your “Home Bank” (HELOC)
Already own a home? Use a Home Equity Line of Credit on your current spot to fund the down payment on your new duplex. I
9. Portfolio Loans (The Local Relationship)
Head to your local credit union. They offer portfolio loans that they keep on their own books, meaning they can be way more flexible with “quirky” properties or your specific financial situation.
10. Partners.
Not ready to be a solo landlord? Perhaps a friend, mentor or family member is willing to invest with you. Make sure you have each partners specific tasks clearly outlined and a mutually agreed upon exit strategy in writing prior to buying anything. It will not only help protect your money, but preserve your friendship as well.
Whether you’re looking to buy your first duplex to house hack or add another investment property to your portfolio, give me a call. I’d be happy to connect you with a lender that’s right for your circumstances,