Multifamily properties with 2, 3 or 4 units may be purchased as owner-occupied homes, as opposed to investment property, if the buyer will occupy one of the units as their primary residence (typically within 60 days of closing). As an owner-occupied buyer, you may qualify for more favorable mortgage rates, and low-downpayment programs, including FHA financing and conventional mortgages. If a buyer is purchasing a 1–4-unit property that they are not going to occupy themselves, as their primary residence, they may still qualify for a 30-year residential mortgage, but typically at a higher interest rate and with a larger down payment. Properties with 5+ units are typically financed through commercial real estate lending, business loans, or alternative funding sources.
You will want to find an experienced agent, with multifamily experience, in the area that you want to purchase. You'll also want to work with a good lender, who also has experience financing similar types of properties to owner-occupied or first-time buyers. The agent should be able to connect you with a reputable lender.
There are a number of details that are different from a single-family home purchase, none that complicated, but important not to overlook. In order to occupy one of the units after closing, you'll need to make sure that one of the units will be vacant, or that you can legally give notice to one of the tenants to vacate. The zoning is another important factor. Sometimes single-family homes are converted into a duplex or something like a detached garage is converted into a guest house, and in doing so, the property no longer conforms to its zoning. Those are just a couple examples, but an experienced agent will be able to help you through the process. Buying a duplex, where you can occupy one unit and rent the other, can be a great way to acquire your first investment property, which you can hold onto and rent both units when you are ready to purchase your own home or another multifamily property in the future.
