Owner occupy by a partner?

Question

I am considering purchasing a triplex, and want to put down as little as possible.  It is out of the question for me and my wife to move into a unit as an owner occupant.  My question is... if I partner with someone on the deal, and the partner occupies a unit in the triplex, does that qualify as owner occupancy for low down payment financing?  Would that partner have to be more than a 50% partner?  Sorry if this has been answered already.  I looked but couldn't find this scenario.  Thanks.

Chris Mason · Answer

Non-occupant coborrowers on FHA 2-4 unit blow up the 3.5% down. I can't remember if it's 20% or 25% down, but either way no one does it since it still has mortgage insurance.

Paul Zaino · Answer

@Chris Mason and @Jim Goebel

Thank you both for your replies. While disheartening, that makes sense.

Jim Goebel · Answer

@Paul Zaino

There are people on these forums that know this better than I - and this is mostly an educated guess: I think when you have a partnership (formal, as in operating agreement) - now you are into the commercial lending world.  That world gets you out of the very advantageous terms of primary occupancy.  Our experience thus far is that once we made the leap to the commercial lending world we are generally seeing a 1-2% adder to our interest rates compared to the long term debt with owner occupant world.

Further, depending on your track record IN this partnership, many banks I think would assess the fact that there's a partnership at all as a potential risk.  Unless they get personal backing/guarantees for lending, etc - and of course collateral.