If you say you are going to live in (1) of the two units, the lender cannot question that. If one of the properties you own is your current residence, they will want to know what the status of that property is going to be.
Just be aware that you do in fact sign “legal” documents stating you are going to be an “Owner Occupant”. If the lender is suspicious, they may check up on the property a few months later and if you are NOT an occupant, things then may get interesting for you.
Owner occupied requirements for a duplex? - Posted by Andrew Ling
Posted by Andrew Ling on May 17, 2004 at 06:34:46:
I’d just like to know what the banks standards are for owner occupancy on a duplex. I’m putting 20% down and doing a stated income loan. I’m willing to live in 1 of the 2 units but will that be enough?
One of my problems is I already own 4 properties including one I just bought last month with cash. If they look into it they’d notice the funds for the down payment on the duplex will come from a home equity line of credit I just set up. Perhaps this will make them suspicious and insist on the investor rate?
As long as you are ACTUALLY living in the property for about 3 months, there shouldn’t be a problem. 90 days is about the max a lender’s fraud unit would check into it. After 90 days, they’ve often already sold it in the secondary market. You may need to write a letter of explanation on a former primary residence, but again, as long as you will actually be inhabiting one side of the duplex, you have every right to get the owner-occ program and rate.
I have purchased 6 properties with HELOC and never had a problem. A few things my lender checked (and I put less than 20% down on 2 of them) was debt to income, cash reserve (they wanted 6 months of the 1 properties payments in savings or the like) and credit score. Our current home I used HELOC with 5% down and got market rate. Check with a few lenders and make sure the rules do not change because the property is a duplex. Best of luck
jeff
If you have a history of moving into each property you purchase the lender could still consider you buying it as an investment property. They could make an even stronger point of it with this paticular purchase since it is a duplex. I’ve been through this with a lender before. If you had a family member moving into the other unit it wouldn’t look as if you were using it strictly as an investment. Every lender is different so it may or may not be an issue.