How To Finance a Duplex or Multifamily Home

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Investing in a duplex or multifamily home can be a good way to generate consistent income, build long-term equity, and, in many cases, even guarantee yourself a place to live for the foreseeable future.

But unless your investment portfolio is already booming or you’re just flush with extra cash, you’ll likely need to secure financing in order to purchase your chosen property.

How does this work with investment properties? Will it cost you more in time, money, or hassle? Let's take a look.

Key Takeaways

  • Purchasers of duplexes and multifamily homes of no more than four units have access to the same residential loans as single-family buyers.
  • You must live in the property in order to qualify for FHA or VA loans, otherwise it will be treated as an investment property.
  • You can typically use rental income from the property to help you qualify for a loan as long as you live there.

Duplex, Multifamily, or Commercial Real Estate?

The first step to financing your investment property is to recognize what category it falls into. If you’re buying a duplex (a two-unit building, essentially) or a multifamily home (a three- or four-unit building), then you’ll have access to the same residential mortgage loans used for traditional single-family home purchases.

If the property you’re eyeing has more than four units, then that would fall into the commercial category. You’ll need to find a commercial lender, and you’ll likely have more stringent qualification and down-payment standards.

Will You Live There?

The second thing you’ll need to address is your stake in the property. Will you just be an investor and landlord, or will you also be a resident of the property? If you opt to live on the property, then you’ll qualify for owner-occupant mortgages, which often come with lower down payments and lower interest rates than those deemed for investors.

If you’ll simply be an investor, landlord, or manager of the property, then you’ll need to stick with conventional financing. You will also have to put at least 20% down on your purchase—possibly more if you want to sure a lower rate.

Loan Options for Duplexes and Multifamily Homes

You have three options to choose from when financing a duplex or multifamily home purchase:

  • An FHA loan (Federal Housing Administration)
  • A VA loan (Department of Veterans Affairs)
  • A conventional loan


Remember, if you’re not occupying the property, the conventional loan is your only choice.

FHA Loans for Duplexes and Multifamily Homes

If you’re an owner-occupant, then you can use an FHA loan to purchase your multifamily home or duplex. These come with low interest rates, low down-payment requirements (just 3.5% down, if you have good credit), and less stringent eligibility requirements. You can even secure an FHA loan with bad credit. The minimum score is just 500 in some cases.

VA Loans for Duplexes and Multifamily Homes

Are you or your spouse a current or former member of a U.S. military branch? Then you could use a VA loan for your duplex or multifamily purchase—as long as you aim to live on the property. VA loans require no down payment, and they offer easier qualification standards and lower closing costs, too. They also don’t require private mortgage insurance or a minimum credit score.

Conventional Loans for Multifamily Homes and Duplexes

With conventional loans, the maximum loan amount depends on the size of the property. For a duplex, the limit is $702,000. For a triplex, it’s $848,650, and for a four-unit home, it’s $1,054,500. When applying, the lender will look at your credit score, income, debts, payment history, and other financial assets you might have.


The higher your down payment is, the lower your monthly payment will be. It also may qualify you for lower interest rates, too, since the risk is lower for your lender.

Use Rental Income To Help Qualify for Your Loan

If you’re worried your current income won’t qualify you for the high-balance loan you need for your multifamily home or duplex, then you might be able to use future rental income to help your case. Generally, in order to count this income on your application, you’ll have to have already signed leases in place indicating how much rent you’ll be paid and for how long.

The mortgage lender might also deduct 25% from your committed rental income total to account for any potential vacancies or maintenance costs that you might incur, so keep this in mind if you plan to use rental income to help qualify for your loan. Use a mortgage calculator like the one below to figure your monthly costs for the property.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Freddie Mac. "Mortgages for 2- to 4-unit properties."

  2. Quicken Loans. "What Is A Non-Owner-Occupied Mortgage?"

  3. Stem Lending. "Mortgage for Mult-Family Properties."

  4. U.S. Department Housing and Urban Development. "Let FHA Loans Help You."

  5. Central Bank. "FHA Loan."

  6. U.S. Department of Veterans Affairs. "VA Guaranteed Loan."

  7. Freddie Mac. "Loan Limits Are Increasing by 7.42% in 2021."

  8. Fannie Mae. "Selling Guide."

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