Duplex Home Loans

Duplexes make wonderful investments and homes, and getting the correct duplex home loan is really the best way to start. Duplex financing has differences depending on if you are buying it as a pure investment or if you will be having owner occupancy of one or both sides of the property.

Duplex Financing for an Owner Occupant

Getting a duplex mortgage when you intend to finance the property without the consideration of rental income is very similar to buying a traditional home. Since most duplexes are considered residential real estate, the requirements are pretty consistent to the financing of a single family home.

When the intention is to live on one side of the property and rent out the other side,  you may have the ability to use the existing or potential rental income to be considered into the financing. This ability though is based on how the lender views you. If you have limited or no track record with investment property or your documentation does not support it, you will probably not be able to leverage this income into the calculation. If you are an experienced investor, you may be able to get some percentage of the income to be calculated into the financing. Each lender is different, as are financing programs so make sure your mortgage professional is clear on what you can or cannot do.

Another thing to ask your mortgage professional is to find out the tenancy requirement in your state. If you get financing under the specifications of an owner occupied loan, make sure your are willing and able to stay the minimum amount of time. If not, you may incur expenses or have to readjust the loan.

Duplex Financing for Home Investors (Dual Tenancy)

Getting a duplex home loan for a duplex investment is somewhat different and adds a few more variables. That being said, a duplex is usually less complex than most multifamily property loans.

One of the main differences between an owner occupant duplex and a duplex investment property, also known as a NOO or Non-Owner Occupant property, is the risk that is perceived by lenders. Being that the property is not your primary residence, the likelihood that you would let the property go into foreclosure goes up, therefore the down payment requirement may go up substantially.  Sometimes the down payment requirement is not raised substantially but you will probably see the differences in your terms.

With duplex financing, there are multiple variables that are considered. Variables include what your credit score is, how experienced you are as a real estate investor, the way the duplex is deeded, if there is current occupancy in the units and for how long, among other things.

A good start is to shop out insurance providers for rates, but as important as getting affordable financing terms is, having a plan in case of a loss of a tenant or both tenants for a period of time is extremely crucial as well. Be smart about not over-leveraging yourself and knowing how much risk you can handle. Duplexes are great investments but not ALL duplexes are great investments.

Shop for Duplex Insurance

As with any loan, it’s smart to shop several providers and find out who can give you the best combination of coverage and affordability. You can shop duplex home loans on our site for all 50 states. Just enter in your zip code to get free quotes from home insurance providers in your local area. Then follow up and ask any additional questions about your quotes and make sure you feel comfortable with the policy you eventually go with.

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