Can I get a 5% down, owner occupy loan, on second duplex

Question

I am looking to purchase my second duplex in Tacoma. I am hoping for 5% down loan. FHA requires 100 distance from my current property, and brokers are saying minimum of 15% down. I feel like I have heard 5% is possible but not finding it.

Joe Wodaege · Answer

@Sam Fickel Thanks again, for the information Sam.

Sam Fickel · Answer

@Joe Wodaege I just realized I didn't exactly answer your question. You don't need the funds to be seasoned at all, since you can paper trail the funds using the settlement statement.

Sam Fickel · Answer

@Joe Wodaege hey, that's awesome to hear! If that's the case, you've got a couple options:

-Buy your next house with FHA. The 100 mile requirement is only if you're using departure residence income, but if you can qualify for both mortgages, FHA is the way to go.

-Do a cash-out refi on your current primary to pay for the 15% down payment on your next duplex, though I don't recommend this because you can't promise to live there 12 months, so it would be an investment cash-out, which carries a few points and higher rate, and for the whole 30 years. Also, your max LTV is 75%

-Get a HELOC against your current primary and use the proceeds for a 15% down payment on your next duplex. You'll have a 2nd mortgage payment and at a higher rate, but at least you can eventually pay it off and maintain your current payment and rate on the soon-to-be previous residence. Also, the max LTV might be as high as 90%.

If you can't go FHA, I'd do the HELOC with Conventional

Joe Wodaege · Answer

@Sam Fickel Thanks Sam, my first loan is conventional with $300,000 in equity. Do I need to season the money I pull out or is it ok for me to finance my down payment on next property that way

Sam Fickel · Answer

Conventional requires 15% for owner occupied, no way around it. If you refinance your current FHA loan into conventional, assuming you have enough equity, then that would work

Joe Wodaege · Answer

@Elise Marquette Thank you Elise that explains my experience.

Elise Marquette · Answer

@Joe Wodaege 5% used to exist for an owner occupied conventional duplex but stopped a few months ago. The lowest you can go for conventional owner occupied duplex is 15% down.

Since it’s a multi, it is ineligible for a 10% down vacation home loan.

Joe Wodaege · Answer

@Nick Belsky thanks for the information Nick

Nick Belsky · Answer

Conv and FHA says 10% on a second home, if you meet all the criteria.  Haven't seen or heard of 5% on agency loans...

Nick

Joe Wodaege · Answer

@John Teachout

Yes John, I plan on occupying one of the units in the next purchase.