Buying Duplex - How to avoid PMI

[Mark H.]

Hello,

Currently in the market for a 2, 3, or 4 unit property - this will be my first home and I intend to owner-occupy one of the units and rent out the rest. I had just assumed that FHA (or 203k) would be the only way to go, however I have noticed other options. I am looking for a loan that meets the following criteria:

• Less than 10% down
• Can be used on a 2, 3, 4 plex
• Owner occupied property
• No Mortgage Insurance (PMI/MIP)

FHA loans seem to meet all of these criteria, though MIP is required - this can add quite a bit to the cost, just looking for other options. If none exist, my plan would be to get a FHA loan and refinance to a conventional loan after it reached 80% LTV. Suggestions?

Thanks everyone!

[Michael Cohen]

@Ricardo Cristobal @Mark H.

You can purchase another property using FHA after refinancing your current place into a conventional loan. However, there is a very big caveat to that: rental income from the vacating home cannot be used as effective income on the new primary residence unless the new home is more than 100 miles away.