How to Buy a Duplex with Less Than 5%

A duplex is a property with two units on one parcel. It’s traditionally a way to get into the investment real estate game, because you get shelter for yourself, plus rental income and extra tax breaks. The rent can offset or even completely cover your mortgage and other costs.

The owner-occupied unit can be treated as a primary residence. The rental unit can be treated as investment property. The rental side can be depreciated and write-off related repairs and improvements.  Always ask a tax professional for details.

Buy a Duplex with a VA Loan - VA guidelines allow qualified borrowers to purchase properties with one to four units and zero percent down. One unit, however, must be your primary residence.  Buying a duplex with the VA program can be very advantageous. First of all, purchasing with nothing down is extremely attractive. Also, you’ll get residential mortgage rates and not investor financing rates, and eligible borrowers can benefit under the VA’s unique qualification system.

Buy a Duplex with an FHA Loan - The FHA, like the VA, does not make investment loans. It requires all financing in its basic 203(b) program to be secured by a primary residence. You have to occupy the home.

That said, you can use the FHA program with 3.5 percent down to buy property with one-to-four units, so a duplex is okay as long as you occupy one of the two units.

The Easterbrook Team wants to hear your hopes and dreams of homeownership and real estate investment.  Call us today for an appointment.  We are located at 806 Bidwell Street in Folsom, California.  Our phone # is (916) 850-6050.