How to split loans on 2-property deal, one FHA one Conventional

6 Replies

I'm looking at a deal that is two duplexes on adjoining lots.  Asking price is $315K for both.

My lender says this would need to be two separate loans as they're separate parcels.

I'm looking at doing one FHA and one conventional.

My question is if there are best practices for how to split the mortgages? Could I do the FHA for, say, $200K; and the conventional at $115K? Putting more into the FHA would mean a lower total down payment.

Also, my lender said he needed to look into it, but wasn't sure you could do FHA if you also own another property within a certain mile range. Anyone know of any restrictions here?

Thanks a lot for any input.

Each loan is going to be based on the appraisals of each property, if a 60% LTV on one and a 80% LTV on the other works, you can do that, not really feasible or necessary. Neither can have an excess loan to value.

On commercial loans, you'd use a "blanket mortgage" one loan on both properties with a release amount assigned to each in the event you sold just one.

As to the distance issue, it sounds like your loan officer is going a second home route under FHA or conventional, and yes, a second home has to be justified as a second residence and lenders, moreover, mortgage bankers in the secondary will not buy the idea of having a second home next door. They want to see second homes 100+ miles away or justified reasonably like a second home at the lake or in a recreational area.

If you have these two properties under one contract, you'll most likely be doing a commercial loan, at least on one if not both. IMO You may be at the wrong money store, or department of your bank. Good luck :)   

@Scott Ellis  As long as the appraisal can support the loan LTV, you can split it anyway you want. Unless the two properties are very different, I would recommend that you split it down the middle. Keep in mind the purchase price will "affect" the appraisal, and you can't go back and change the purchase price to match the appraisal. So pick wisely.

Do you currently have a FHA loan? What type of property do you currently own/live in?

As said, each loan/purchase must stand and qualify on it's own. As for the FHA, if your other loan is not FHA it won't matter. If it is, you'll likely not qualify for the few exceptions allowing two FHA loans. The conventional loan for the second duplex obviously could not be an owner occupied loan, but an investment property loan.

The loan will be per APN (Appraiser's Parcel Number) and as long as there's an APN per unit, you get a loan per unit.

I had the inverse problem: two triplexs on one APN and wanted to subdivide to allow selling one and keeping the other.  That's zoning variation and - - of course - - that failed.

Thanks for the replies.

The two duplexes are exact same footprints.  Taxed assessed at $141K and $143K.  Zillow estimates are at $208K & $210K.

@Upen Patel , I currently own in a house with a conventional mortgage. We're renting several rooms out in it. So our plan would be to fully rent that out, move into one duplex with an FHA and have an additional investment duplex next door with a 30 yr conventional.

NA Beard, bummer.  Sorry to hear about about your zoning issue.