How to get a low down payment on a duplex?

[Mary Jay]

Hi guys,

I am moving to Florida and wanted to buy a duplex.

IS there any way to buy it with a low down payment? Because I asked couple of lenders and they say that it has to be at least 25% down.

I see other people buying with a 5% down payment FHA...

I do own other real estate, so I am probably not going to qualify for the FHA, but can I get at lease conventional loan with 5-10% down? Preferably 5% down...

Thank you!

[Julee Felsman]

@Mary Jay FHA is probably your best bet. FHA allows as little as 3.5% down.

FHA has no restriction on owning other real estate. In fact you can even have more than one FHA loan at a time so long as up meet one of a few criteria (one of which is moving to a new area at least 100 miles from your other FHA-financed property). 

FHA did recently change a guidelines in an important way when it comes to using rental income when figuring your qualifying income for a new loan.

It used to be that lenders could add 75% of the appraisers opinion of the market rents for the other unit in a duplex to your qualifying income. Now the rental income must be reduced by 25% (from 75% to 50%) unless you can show you have at least 6 months of the loan payment (including taxes, insurance, mortgage insurance) in "reserves" left over in savings after closing.

And this rule applies to your other real estate too... to use rental income to offset those payments you must either show 6 months of reserves or show that you have a history of rental income on the property and have received the previous two months of rental payments.

Hope that helps!

Julee