Owner occupied duplex trying to buy another with 5% down

10 Replies

I have an owner occupied duplex, I am trying to buy another duplex that I will owner occupy. Can I finance it with 5% down? I have been told conflicting things. Help.

@Heath Dunn , how long have you lived in the first one? More than a year? Is the next one in the same city? The usual caper is to refinance out of an FHA-approved loan as soon as you have more than 20% equity in it, providing your new low-deposit FHA loan has determined that you can afford the two mortgages. More details might help. Welcome to BP...

Is your current loan an FHA loan? As Brent stated, you are generally only allowed 1 FHA loan at a time. Once you have accumulated the necessary 20% equity in the property, whether through principle-pay-down, forced or natural appreciation, or a combination of multiple factors, you would then seek to refinance to a conventional loan with the 20% down payment already built into the property. You could then pursue a new FHA loan.

Something to consider: I'm scheduled to close December 29th on an owner occupied duplex. I was able to secure a 30yr fixed mortgage with only 5% down through Ruhl Mortgage without the need for FHA. You may have some luck shopping around with different lenders to see if you're able to hit your 5% target without resorting to an FHA. (I avoided FHA due to some repairs that needed to be made on the property that I feared would derail or delay the process in getting an FHA loan to make it through to completion.)

Best of luck on your endeavor.


Thanks a lot for the help guys. A little more information about my situation. I am a newer investor. This is my first duplex. I closed in February. It is an fha loan. I am trying to prepare to make a move as soon as I can and purchase another property. I paid 133000, it's now tax valued at 151000. I have 8000 in the bank. I'll probably have 10000 in February when the year is up that I have lived in the home. Should I just sit back, wait, and build my capital or do you guys have suggestions? I am motivated.

I don't have enough experience yet with trying to refinance out of an FHA to know how the process works, so I'm not sure yet if you'd be able to get an appraiser to value the property high enough to create the 20% you need. I suppose that even if you were able to refinance and have the property appraise high enough to get you to your 20% mark, you might not have the cash left over to cover the new 5% down payment.

My suggestion would be to check with several lenders and see if any will approve you for a 5% conventional. You may be able to go that route rather than waiting to be cleared for another FHA. As I said, Ruhl Mortgage was who got me a 5% conventional. They were much more aggressive at making it happen than my local banks.

Keep us posted,


To update on my end:

It turns out Ruhl mortgage was NOT able to come through with a 5% conventional. My loan servicer was informed incorrectly and then was set straight in underwriting that they aren't able to provide that product. I ended up going with an FHA loan.

Did you ever figure anything else out on your end?

Hey Dan, I have not found a solution yet. I'm curious to know do you already have another duplex? One of the lenders that I went to (who was not creative at all by the way) said that they wouldn't give me another fha on another duplex even if I had 20 percent equity in it. They told me that they would view that as me just trying to purchase rental property using the day program. I think the guy might just not be educated about it or his specific company may not.

Hi! @Heath Dunn The lender you spoke with is absolutely correct. You can only have 1 FHA loan at any given time, so you can't buy the 2nd duplex using FHA. Unless you are moving to a different area or have some other life event, you would NOT be approved for an another duplex purchase using a low down payment loan program.

The fact is that you are trying to buy investment properties as "owner occupied" using the low down payment loan programs. That is not what the low down payment loan programs are for.

I am sure you will get a loan if you buy a SFH/TH with the low down payment loan program. Or move some 100+ miles away.

Good luck.

Recently spoke with Bank of America about a pre-approval letter. I bought a two-family house using an FHA, lived in it for three years and am now renting it out. Wife and I are looking for a single-family home as our primary residence and BoA said they could offer me a mortgage for this new purchase with 5% down.

That said, my credit score is 800 and my rental income on the two-family has been seasoned, so I'm not sure if those factors played in, but yes, it's possible to get a conventional, low down payment mortgage that isn't an FHA.

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Thanks alot guys. So I guess I need to be looking for a conventional lower down payment loan to purchase another duplex? Something for less than 20 percent. Thanks for all the help.

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