Owner occupied duplex interest rate vs. single family home interest rate

Dallas, Texas
Private Lending & Conventional Mortgage Advice
3yFollow

Owner occupied duplex interest rate vs. single family home interest rate

Eiger Bern
Member since 2023 · 1 post · 0 votes

With the current 30-year fixed mortgage interest rate at approximately 7.05%, I am curious about the additional interest I might have to pay for an owner-occupied duplex. Both properties have a 20% down payment.

As a well-qualified buyer with an 804 credit score and high W2 income, I expect to receive a prime rate.

I want to ensure that my local credit union isn't offering me excessively high rates.

0Reply
127 views

Most Popular Reply

Jay HurstBusiness Member
Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
3y
Quote from @Eiger Bern:

With the current 30-year fixed mortgage interest rate at approximately 7.05%, I am curious about the additional interest I might have to pay for an owner-occupied duplex. Both properties have a 20% down payment.

As a well-qualified buyer with an 804 credit score and high W2 income, I expect to receive a prime rate.

I want to ensure that my local credit union isn't offering me excessively high rates.

@Eiger Bern    An owner occupied two unit carries a loan level pricing adjustment of .625 with 20% down.

Fannie Mae LLPA matrix

It is important to understand that .625 adjustment leads to about .250% in actually rate difference on originators rate sheet. So, if you CU SFR is 7.05% then likely the 2 unit will be 7.25%~. That being said, assuming credit is good, you should be able to better then that.

Hurst Real Estate, INC4.987 Reviews
WebsiteView Page
3Reply
See this reply in the discussion

5 Replies

Jump to latestLatest
  • Jay HurstBusiness Member
    Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
    3y
    Quote from @Eiger Bern:

    With the current 30-year fixed mortgage interest rate at approximately 7.05%, I am curious about the additional interest I might have to pay for an owner-occupied duplex. Both properties have a 20% down payment.

    As a well-qualified buyer with an 804 credit score and high W2 income, I expect to receive a prime rate.

    I want to ensure that my local credit union isn't offering me excessively high rates.

    @Eiger Bern    An owner occupied two unit carries a loan level pricing adjustment of .625 with 20% down.

    Fannie Mae LLPA matrix

    It is important to understand that .625 adjustment leads to about .250% in actually rate difference on originators rate sheet. So, if you CU SFR is 7.05% then likely the 2 unit will be 7.25%~. That being said, assuming credit is good, you should be able to better then that.

    Hurst Real Estate, INC4.987 Reviews
    WebsiteView Page
    3Reply
  • Jamie Jones
    Lender · Nashville, TN · Member since 2017 · 205 posts · 107 votes
    3y

    As @Jay Hurst mentioned, a 2-4 unit property is going to add an additional adjustment of .625. This is typically paid by the interest rate increasing by approx. .25%, but could also be paid in the form of upfront discount points to keep your rate the same. Either way, it's a small price to pay to get that monthly rent to help offset the PITI payment!

    0Reply
  • Stephanie Annor
    Rental Property Investor · Houston, TX · Member since 2023 · 2 posts · 0 votes
    3y

    Can I jump on this too if I may? I too am purchasing and owner occupied multifamily(single family with an ADU in the back) in Houston. My lender has me at 7.125%. I'm doing FHA so putting down 3.5% and my credit score is above 800. Is this rate appropriate?

    0Reply
  • Jay HurstBusiness Member
    Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
    3y
    Quote from @Stephanie Annor:

    Can I jump on this too if I may? I too am purchasing and owner occupied multifamily(single family with an ADU in the back) in Houston. My lender has me at 7.125%. I'm doing FHA so putting down 3.5% and my credit score is above 800. Is this rate appropriate?


    That is much too high for an FHA, but about right for a conventional. What you describe is actually considered a single family not a multi family. (assuming the ADU us subordinate in size etc) Maybe your LO is quoting it as a multi which has higher rates.

    Hurst Real Estate, INC4.987 Reviews
    WebsiteView Page
    0Reply
  • Stephanie Annor
    Rental Property Investor · Houston, TX · Member since 2023 · 2 posts · 0 votes
    3y

    Hmm that's what I was thinking too. Yes the ADU is about 320 sq ft. The main house is a little over a 1000. Thank you for this insight. I'm going to my LO about this.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free