203k loan alternative for non owner occupied

[Thomas Morgan]

Have a two unit residential that would be an OK rental while the market is appreciating. A FHA 203k rehab loan is perfect for it but one unit has to be owner occupied to qualify. Any other similar govt loans or other products with 3% down payment?

[Mitch Coluzzi]

Not to my knowledge, perhaps someone else has better insight towards govt loan programs.  That said, most private lenders are going to be looking for a bigger down payment, and if not you'll be paying through the eyes for the risk (via interest).

You say it is an "OK" rental while the market appreciates.  I want to emphasize caution.  If you're looking for a 203k loan structure, it indicates to me you likely have limited cash reserves.  If your rehab goes over, you experience a vacancy or large unexpected maintenance issue... an "OK" property can quickly cost you money for the year and that appreciation will not help you one bit.   

Also keep in mind the time of year and your rental seasons, winter can take longer to find tenants.  That may not be the case in your area, but something to consider.