Low down payment loan on a duplex

[Todd S.]

I would like to buy a duplex in the Sacramento, CA area for as little down as possible. I plan to live in one side for a year, while renting out the other. I have not had any luck finding 5% down 30 year fixed rate financing. Ideally, I would like to find a loan program where I could do a 80% first and 15% second, so I could avoid PMI. Does anyone know if these type of loan programs exist? Thanks everyone!

[Dan P.]

If you are looking for conventional financing, the max allowed CLTV is 85% for Fannie Mae. FHA will allow you to go as low as 3.5% down, but you will be paying mortgage insurance.

Low downpayment and mortgage insurance will always coincide in the conventional financing world. If you plan on doing some work to increase the property's value, your best bet would be to buy with a 3.5% down FHA loan and refinance to a conventional in the future to drop the PMI (assuming you have the equity of course).