finance a duplex Not living in the property?LESS than 20%

[Ashley Kebreau]

Hello,

I'm a newbie and interested in learning about my financing options. I'm planning on purchasing a duplex out of state, so I will not live at the property. What are my options? It seems everything requires 20% or more down, or you have to physically live at the property. Am I missing something? Your advice is appreciated! Thank BP

[Will Fraser]

Hi @Ashley Kebreau, you said it well!  (nearly) everything is going to require at least 20% down on the property (not just on a duplex, this applies to all residential properties) when you aren't living there.

The only workarounds to this would be: 

• Use a commercial loan product from a bank that allows for less than 20% down.  Usually this would be 15% and rarely lower.  The tradeoff is that these loans will usually have adjusting interest rates and (sometimes) shorter amortizations than a mortgage loan can.
• Use hard money.  The trade off with this is that most HMLs that I've come across are wanting 20% or more down OR some really high rates.

The reasoning here is one and the same -- risk.  Having lower equity stakes in a property constitutes more risk for the lenders, which has to be offset someone (either a government backed insurance product in the case of many mortgages, or through a higher rate of return with HMLs).