Mortgage for duplex as a Secondary/vacation home in Alabama

10 Replies

Hi everyone,
I've recently got a bank owned two unit duplex under contract in Gulf Shores Alabama. Plan is to occupy one unit as a vacation/second home and rent out the other unit as a short term rental.

All the lenders I have talked with are treating this as an investment property instead of a Second home and are requiring us put 25% down.

We are hoping to find a conventional lender willing to lend at 15% down that may need to portfolio the loan if Fannie Mae won't allow for duplex second/vacation home properties.

We're not looking for any hard money lending or rates that exceed 5%.

Any one have any suggestions or good contacts in Alabama?

Originally posted by @Adam Ailion :

Hi everyone,
I've recently got a bank owned two unit duplex under contract in Gulf Shores Alabama. Plan is to occupy one unit as a vacation/second home and rent out the other unit as a short term rental.

All the lenders I have talked with are treating this as an investment property instead of a Second home and are requiring us put 25% down.

We are hoping to find a conventional lender willing to lend at 15% down that may need to portfolio the loan if Fannie Mae won't allow for duplex second/vacation home properties.

We're not looking for any hard money lending or rates that exceed 5%.

Any one have any suggestions or good contacts in Alabama?

Fannie/Freddie/FHA/etc does not acknowledge the existence of multi unit second homes. :\

Hi @Adam Ailion , I'm interested to hear whether you were able to secure financing via a conventional lender w/ 15% down? I'm looking at buying my first property in the Gulf Shores area and am running into the same issue for a one unit. Thanks!

Originally posted by @Victor Warnsley :

Hi @Adam Ailion , I'm interested to hear whether you were able to secure financing via a conventional lender w/ 15% down? I'm looking at buying my first property in the Gulf Shores area and am running into the same issue for a one unit. Thanks!

 Hi Victor,

15% down is the niche for owner occupied duplexes, and single family investment properties. If it's an SFR "second home" (aka vacation home), and it isn't necessary to derive rental income from it to make the mortgage math work, then 10% will do.

Originally posted by @Victor Warnsley :

Hi @Adam Ailion , I'm interested to hear whether you were able to secure financing via a conventional lender w/ 15% down? I'm looking at buying my first property in the Gulf Shores area and am running into the same issue for a one unit. Thanks!

Hi @Adam Ailion , I'm interested to hear whether you were able to secure financing via a conventional lender w/ 15% down? I'm looking at buying my first property in the Gulf Shores area and am running into the same issue for a one unit. Thanks!

Hi Victor,

15% down is the niche for owner occupied duplexes, and single family investment properties. If it's an SFR "second home" (aka vacation home), and it isn't necessary to derive rental income from it to make the mortgage math work, then 10% will do.

@Chris Mason you rock man! Thanks for this! This gives me the confidence to move forward. 

Originally posted by @Jodin Concepcion :

@Chris Mason What lenders will allow duplex as second home?  

 None. 

Well, a hard money lender might... they can do whatever they wish to do.

@Chris Mason Thanks Chris. That will save me a ton of time! I bought my first investment property two years ago and would like to buy another. Plan B....Heloc on first investment? I don't want to lock myself in with a refi. Pulling from primary is tricky because I own a coop in NYC. Much more complicated. Everything is more complicated actually in NYC.