For first time buyers or buyers in expensive areas like California that want to keep their housing payments down, buying a duplex with FHA financing is a really great way to go. Many times a home buyer can buy a duplex, and after collecting the rent from the other unit, their total housing payment is less than if they would have bought a condo and certainly less than if they purchased a single-family home. Additionally, if you want to eventually move out of the duplex to a single-family home, you can always keep the duplex as an excellent long term investment. Or if you stay, over time the rents will rise on the other you unit you rent where your housing payment will stay fixed, so over time the rent from the other unit may pay your total housing payment and you live for free! How is that for a retirement program!
FHA makes it very easy to qualify for a FHA loan on a duplex. It’s is really a fantastic niche because you can get the same great FHA financing you can get on a condo or single-family home on a duplex:
- FHA loan down payment only 3.5% on a duplex, and all of that can be a gift from a relative
- The same historic low FHA loan interest rates can be had on a duplex with 30 year fixed rate loans
- FHA allows you to count 90% of the rental income from the other unit to help you qualify FHA loan on a duplex. This extra income can help you qualify for a higher purchase price than a condo or single-family
- Maximum FHA loan in many parts of California for duplexes are higher than the maximum on condo’s or single-families…up to as high a $934,200 in many counties in California (and other states). This allows you to buy a duplex in the best parts of Los Angeles, San Diego, San Jose, San Francisco, etc…
- FHA loan credit scores do not have to be perfect to buy a duplex
- Conventional loan vs FHA with buying duplex…you probably need 10% down payment with conventional and the qualifying credit and debt ratios are much more strict
So if you are in the market to buy a property, think about buying a duplex.
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
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