How to finance my first duplex? Is this true?

Question

A local loan officer at Summit Funding in Stockton wrote the following...

"The maximum LTV for a 2-unit property is 85% plus it is required that you have 6 months reserves PITI.  To give you an idea what that looks like a $225,000 sales price would require approximately $44,000 to close.  You would need to total of $53,000 with reserves."

I've heard several podcast where you only need 5% down for your first duplex. I only have $15,000 saved up and was hoping to purchase my first duplex around 200k by the end of this year. Do I need to save another $40,000? Can someone help me with this? Thanks!

Harjeet Bhatti · Answer

You have following options if you are buying this house as primary residence:-

3.50% under FHA.

5% down payment under Home possible.

If you are buying as an investment  you need 25% down payment under conventional.

Michael Cohen · Answer

FHA for an owner-occupied is 3.5% down on 1-4 units. On a duplex, FannieMae is 85% LTV and FreddieMac is 80%.

My guess is that Summit Funding has overlays - additional rules over and above the guidelines in order to lower their risk.

Andrew B. · Answer

sounds like you are looking at a non-owner occupied loan. if you live there for at least one year, you can get better loans, including FHA 3.5% down loan.

Saberian Younger · Answer

A year ago the rules were investment mortgages 1-4 were 20% SFH 25% MFH, mortgages 5-10 were 25% SFH and 30%MFH with liquidity requirements as I stated above. Now I believe mortgages 1-10 are 15% down only. Excluding what has been mentioned above if you'll be living in the property.

Saberian Younger · Answer

Liquidity is not required until mortgages 5-10 as far as I know.

Michael Cohen · Answer

Harjeet is correct; I brain-farted on Home Possible!

Gustavo Medina · Answer

@Josh C.  @Saberian Younger  @Andrew Boettcher

First off thanks for responding, I really appreciate the help. I want to live in the one of the units, so it would be owner occupied for at least one year. I'll bring this up with my loan officer, see what he says. Thanks.

How to finance my first duplex? Is this true?

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