Considering house hacking a duplex. Few questions

[Colton S.]

Am looking to buy my first house. Found a duplex for $550k with tenants paying $1100 on a month to month lease. Tenant that would be staying is expecting a rent increase. My question is about doing 3.5% down or 20% down. 

Option A - Put 3.5% down and pay $1800ish a month to live in one side of the duplex. Rent would not cover the mortgage if I happened to move out after the first year.

Option B - Put 20% down and pay $1200ish a month to live in one side of the duplex. Rent other unit out for $1300-$1400. Rent would cover the mortgage + $200ish extra a month if I moved and rented out both units. 

Option C - Wait for better opportunity or just buy a single family home and live there for the next 1-2 years then turn it into a rental when I move out. 

Is it common to have to put down 20% in order for a property to get close to cash flow? I have extra funds to cover a negative cash flowing property but am unsure if I want that with how high the market currently is. Trying not to count on appreciation being a factor.