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REAL ESTATE Financing on a duplex

Fadetoblack

PARKED
Nov 27, 2007
4
0
8
Detroit
Me and a friend have been looking in purchasing a duplex that would be used as an income property (owners would not occupy). In the areas we have been researching 10% down is more then enough to recieve a good amount of cash flow. Is 20% going to be required on something like this? Any insight on how financing works on this would be greatly appreciated.

Thanks.
 

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JesseO

Contributor
Jul 25, 2007
548
31
33
Phoenix, AZ
A duplex is considered a residential property, so 20% down isn't required. Purchasing this would be the same as buying a house in the eyes of a lender, so financing really wouldn't be any different. Good luck =)
 

yveskleinsky

Bronze Contributor
Speedway Pass
Jul 26, 2007
2,233
496
192
42
Totally depends on your lender. It is possible to get a 10% down loan, so keep asking until you find a bank that allows this! :)
 

J P D

New Contributor
Nov 6, 2007
59
6
17
Chicago, Il
You may have a hard time finding finance with less than 20% down on an investment property these days. Many lenders I talked with were requiring no less than 30% down.

In the eyes of the lender, a duplex intended as investment property is not the same as a duplex intended as your primary residence. They figure that you might have trouble covering the mtg of both home and investment should you experience 100% vacancy. And with the lending industry in its current state, they will be hesitant to risk lending to you without 20% of your own money down. I see that you are 20, this may be a factor when they start to look into your income, credit and job history if you lack any of those. I am not making any assumptions about you or your situation, just something else they will take into consideration.

However, if there is two of you going in on it together, you might even out the debt to income ratio.


good luck.
 

yveskleinsky

Bronze Contributor
Speedway Pass
Jul 26, 2007
2,233
496
192
42
Totally depends on the bank. The lending market right now is changing a lot- daily. You can still get 100% financing for investment properties, but you'll pay through the nose for it. For an investment property banks generally want anywhere from 0-30% down.

I just got 10% down a couple of months ago- but I had to call several banks. ...As a general rule of thumb, keep asking until you get the answer you want. ...My first home, I went to over 13 different banks before I was approved for the rate, terms and amount I wanted. The lesson: "Never, never, never give up". (McArthur?)
 
OP
OP
F

Fadetoblack

PARKED
Nov 27, 2007
4
0
8
Detroit
Thanks alot for the helpful info. The reason i think i may have a good chance at getting 90% of it financed is at the moment i do not own my own home (i rent) so i guess me or my partner could claim we intend on living in it? My credit score as of 6 months ago when i checked was a 747. The problem is being 20 years old i dont have a long list of credit history which i know banks love to see.
 

yveskleinsky

Bronze Contributor
Speedway Pass
Jul 26, 2007
2,233
496
192
42
Thanks alot for the helpful info. The reason i think i may have a good chance at getting 90% of it financed is at the moment i do not own my own home (i rent) so i guess me or my partner could claim we intend on living in it? My credit score as of 6 months ago when i checked was a 747. The problem is being 20 years old i dont have a long list of credit history which i know banks love to see.
Why don't you move into it and buy as owner occupied? ...I really don't recommend being dishonest to get a better rate. Plus, if you move in owner occ, generally you can still do 100% financing. ...Credit score is great-that's all banks look at- well, that and money in the bank.

I bought my first home when I was 20, so it can be done. ...And I was making less than $5/hr and had no credit score. (This is my "I had to walk 10 miles in snow, uphill" story for you!) It can be done- I'm proof!
 

JesseO

Contributor
Jul 25, 2007
548
31
33
Phoenix, AZ
Fadetoblack, you can get up to 100% financing with duplexes. Many people have to search 10+ banks/unions/etc to get the financing, but the point is that it is possible. Your 700+ credit score should be a great point when talking to these banks. Make sure that you're confident and assertive without being rude. This is your deal, go for it! I am 99% sure you can make this work.

Also, Yves made some great points in her above post...definitely things to consider =)
 

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