Duplex Loan

5 Replies

Hey BPers!

My husband are in Lexington, KY and recently went to a local REIA meeting (for the first time!). We were talking with a member who owns several duplexes and we are considering purchasing our first duplex. We own a few single family homes that are all cash flowing, but this member told us it was going to be very difficult to get a loan for a duplex. Has anyone else has this issue too? What can we do to prepare for the bank to not have any or minimal push back?

Thank you!

Liz

There's nothing difficult about it as long as you have the 20-25% down payment for a conventional mortgage. The only thing that would make it difficult is if there are issues with the property that would keep it from getting financed conventionally, or if you already have hit the max amount of loans your current bank will finance (sometimes 4-5). Some banks like Wells Fargo will loan up to 10 and local/regional banks and credit unions will typically go up to 10 or more if they are a portfolio lender.

But assuming there isn't anything wrong with the property at all, its just another real estate investment, nothing out of the ordinary there won't be any issues to get a loan as long as you meet the lending requirements. Personally, the fact he stated that when he's an REI and its his own property, I'd be sure to do as much due diligence on the property as possible.

Hello Liz,

Welcome to BP!

We invest in multifamily houses (2-4 units) and from what I have seen, you can expect be required to put 5% more down to purchase the duplex with a conventional loan than if you were buying a single family.  For loans 1-4 (including your residence) they will want 25% down instead of 20%, and loans 5-10 they will want 30% down.  The appraisal and inspections will cost a little more since you are dealing with a duplex (but less than a tri or quad).

Getting loans 5-10 is more difficult, it takes more scrutiny from underwriting from what I understand and not all banks will take on these loans.  We are buying our 4th and 5th property (under contract right now) which will make 6 loans for us, however we are able to put these last two in my name only- our home and first 3 are in my husband's name only.  I am putting 25% down on these two and will buy the next 2 in my name as well, then we will have to start bringing 30% to the table.

Hope that helps,

Kelly

@Liz Rogers why would it be hard to get the financing for the duplex? Are you already at your limit for properties? Are you AND your husband both at the limit or can you do the duplex in just one of your names to get the property? A duplex should be just about the same process as getting financing for a single family home, so I am not sure why it would be hard to get financing for it.

Thank you Drew and Kelly! This helps a lot and gives me some information I did not know! I really appreciate it!

Liz

Hi Josh! 

No, neither one of us are at our limit. We were just talking with a fellow member and told her we were wanting to buy a duplex. She has several duplexes and single families and she told us to be prepared because it is so much more difficult to get financing for a duplex. We are just in the beginning stages of doing our due diligence for the duplex we are interested in so we haven't even talked to a bank yet. I just hadn't considered that it would be more difficult to get financing for it so I wanted to know what experiences other people had had. 

Thank you!

Liz

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