Owner Occupied Duplex

10 Replies

Hi all! I've recently learned that I could be relocating to the Dallas area due to a job transfer. I have some time before that will happen, but I wanted to get some advice on purchasing a duplex or triplex. Specifically, are banks a bit more lenient if they know you will be renting out part of your property when it comes to approving a loan? Especially if I have little to no money down.....

I used a VA loan to purchase my first house nearly two years ago (it will be past the two year point by the time I'm ready to buy). Am I allowed to have more than one VA loan?

Thanks in advance for the input! I'm open to any suggestions!

@Billy Daniel  

I don't know about the 2x VA loan question. I would call the VA and ask. There is nothing on the website that would indicate either way.

Banks will not use any rental income to help you with a loan until it has been on your tax returns for two years.  So, no, banks are not more lenient if you are buying a rental property.

Here are 5 ways (well 4 for you) that might help you into a 2-4 unit property:

0% Down:
NACA (https://www.naca.com)
VA Loan (http://benefits.va.gov/HOMELOANS/index.asp) Rural Development Loans (Renovations MAY be included)
(http://www.rurdev.usda.gov/HSF-About_Guaranteed_Loans.html)

3.5% Down
FHA (http://portal.hud.gov/hudportal/HUD/topics/buying_a_home)

3.5% AND Renovations
FHA 203k loan (http://portal.hud.gov/hudportal/HUD/program_offices/housing/sfh/203k)

5% Down Homepath Owner Occupied

I've been looking into the VA loan myself for a primary residence in FL. I don't believe that a new one should be an issue since it will be your primary residence. This is especially true since you lived in that first property for a number of years.

What are your plans for the first property? Sell? Rent out?

Hi @Billy Daniel . Definitely do your research on all of your options with the VA loan. There are some good threads on that here on BP. From what I've read that is an excellent loan option to have and you can basically keep using it for various deals until you max it out.

I could be wrong but I'm pretty sure our FHA loan on triplex did take into account some of the existing rental income from the property. We did have to have 3 or 6 months reserves in our bank account and that couldn't be gift money. It took a bit of time (4 month escrow) but we eventually got it. So far has been a great way to get started.

Cheers,

-Orion

Originally posted by @Billy Daniel:

Hi all! I've recently learned that I could be relocating to the Dallas area due to a job transfer. I have some time before that will happen, but I wanted to get some advice on purchasing a duplex or triplex. Specifically, are banks a bit more lenient if they know you will be renting out part of your property when it comes to approving a loan? Especially if I have little to no money down.....

I used a VA loan to purchase my first house nearly two years ago (it will be past the two year point by the time I'm ready to buy). Am I allowed to have more than one VA loan?

Thanks in advance for the input! I'm open to any suggestions!

Billy your question is well geared for a loan officer. The VA entitlement was used when you purchased your first home the entitlement is used up however slowly builds up again. Chances are that after two year you will not have full entitlement left which means you may not be able to buy with 0% down again if you have a partial entitlement you'll have to cover 25% of the difference. For instance if based on your market in Dallas the current entitlement only allowed you to buy only 75,000 but you want 200,000 then you'll need to bring in 25% of the 125,000 difference which would be 31,750 down as an example or you may consider refinancing or selling your current property using conventional financing if you have enough equity or sell prior to using your va entitlement again.

Hope that helps and you were able to follow. As you can see it it can be a bit complex but with the right help of a mortgage professional it can help you be on the right track.

Originally posted by @Billy Daniel:

Hi all! I've recently learned that I could be relocating to the Dallas area due to a job transfer. I have some time before that will happen, but I wanted to get some advice on purchasing a duplex or triplex. Specifically, are banks a bit more lenient if they know you will be renting out part of your property when it comes to approving a loan? Especially if I have little to no money down.....

I used a VA loan to purchase my first house nearly two years ago (it will be past the two year point by the time I'm ready to buy). Am I allowed to have more than one VA loan?

Thanks in advance for the input! I'm open to any suggestions!

 Rental income can be used on the subject property you're looking to buy to help you qualify for the property.

You should ask a mortgage professional not investors on what is required for va financing.

I've funded many va loans for investors who use the program correctly (as a primary)) and the benefits afforded by this great program. You can strategically use conventional and FHA along with the va program depending on your particular scenario.

Originally posted by @Albert Bui:

 Rental income can be used on the subject property you're looking to buy to help you qualify for the property.

It can?  Is that only for owner occupied places?  I keep getting told that my rental income only qualifies after 2 years of appearing on my tax returns.  

@Aaron Montague  

Good questions. 

Most definitely for a loan officer.

@Albert Bui  

As far as I am aware, the rent coming in from a rental can only be used as income if it is occupied for two years.

I would be glad to hear something else...

Originally posted by @Terry Evans:

@Aaron Montague  

Good questions. 

Most definitely for a loan officer.

@Albert Bui 

As far as I am aware, the rent coming in from a rental can only be used as income if it is occupied for two years.

I would be glad to hear something else...

That may be true from banks who place that "overlay," to reduce their expose to inexperienced landlords however FHA and VA don't actually require that so you may need to find a lender who does not have that overlay requirement.

Originally posted by @Aaron Montague:
Originally posted by @Albert Bui:

 Rental income can be used on the subject property you're looking to buy to help you qualify for the property.

It can?  Is that only for owner occupied places?  I keep getting told that my rental income only qualifies after 2 years of appearing on my tax returns.  

Yes on owner and non owner occupied properties for Fannie Mae sold loans for Conv, FHA, VA. You can use rental income to qualify. It's important to note that the way we calculate income for qualifying is different if it's owner or non owner occupied which is beyond this response. The rental income for non owner property is applied more favorably and on owner occupied.

The 2 year requirement your encountering is either a Freddie Mac lender or an additional overlay that that bank is requiring since Freddie Mac does require 2 years but Fannie Mae does not.

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