Skip to Main Content

Financing a Duplex: How to Get a Loan for a Multi-Family Property

Investing in a duplex can help you generate rental income — and if you live in one of the units, you can typically secure financing more easily.

By Miranda Marquit

Written by

Miranda Marquit


Miranda Marquit is a personal finance journalist with work featured on NPR, Marketwatch, FOX Business, The Hill, U.S. News & World Report, Forbes, and more.

Edited by Reina Marszalek

Written by

Reina Marszalek

Senior editor

Reina is a senior mortgage editor at Credible and Fox Money.

Updated March 21, 2024

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances.

Read More


Investing in real estate can be daunting. The right property isn’t always easy to find, and financing can be just as difficult to come up with. For beginner investors, one solution might help reduce the hassle: Buying a duplex.

As the owner of a duplex, you can live in the property while renting out the remaining space. And since you’ll be using it as your primary residence, it could be easier to get financing.

What is a duplex?

A duplex is a property that’s divided into two separate living spaces. It’s basically like having two homes in one property. Each living space has its own entry, and some even come with separate garages and outdoor spaces.

A duplex is different from a twin home, which has two homes and two lots, and are considered two different properties. With a duplex, one mortgage covers both units.

What is a multi-family home?

A multi-family home is a property that has different units that families can live in. The term is typically used to describe a property with two to four units. Duplexes are a type of multi-family home.

The case for living in a duplex

When you buy a duplex, you can become an owner-occupant, living on one side of the property and renting out the other. This comes with certain advantages:

  • Easier to finance: Living in a duplex might prove to be a simpler investment for first-time real estate investors. That’s because it’s usually easier to get financing for owner-occupied properties than nonowner-occupied investment properties.
  • The other unit helps pay your mortgage: Depending on the rental market in your location, the rent paid by your tenants in the second unit may cover your entire mortgage payment. At the very least, it’ll help with a significant portion of it.
  • Only one shared wall: If you like some degree of privacy, you only have to share one wall when you get a duplex.
  • Chance to start building rental income: Your duplex can be a way to start building income. Once the second unit is providing cash flow, you could potentially move out of the duplex and get a tenant to replace you. With the extra money, you can look into getting another property.

Counterpoint: There are some drawbacks to living in a duplex as well, including the potential that you might not like your neighbors and the fact that you’re responsible for repairs and maintenance throughout the property, not just in your unit.

The case for investing in a duplex

Rather than living in the duplex, you could get a multi-family mortgage and rent out both sides of the duplex. Some of the advantages of financing a duplex this way include:

  • More rental income: By renting out both sides of the duplex, you’re likely to get more rental income, providing you with more cash flow.
  • Avoid living next to your tenants: If you don’t want to be bothered by tenants, renting out both sides allows you to avoid hassles. Your tenants are less likely to come to you since you won’t be living next door. They can contact you during normal business hours when there’s an issue.

Counterpoint: It can sometimes be harder to get financing for a duplex — or any investment property — when you aren’t living in one of the units. You might need a bigger down payment or the lender might require other paperwork and documentation since the loan would then be considered an investment loan.

How to finance a duplex or multi-family home

Financing a duplex you plan to live in is generally easier than one you don’t live in. If you don’t plan to live in the unit, it’s usually considered an investment property, so you’ll need to come up with a bigger down payment and meet other lender requirements.

For owner-occupied properties

In general, the process of financing an owner-occupied duplex is fairly similar to getting a mortgage for a single-family home.

Depending on the type of mortgage you get, you’ll need to meet the following down payment requirements for an owner-occupied duplex:

Conventional loan
FHA loan
Min. down payment
Closing costs
Mortgage insurance
[1]If down payment is less than 20%

Conventional loan

At a glance: Conventional loans are made with a private lender and without government backing. Depending on the lender, you could put as little as 15% down for a duplex, although you might need to pay for private mortgage insurance (PMI).

You can use a conventional loan as a multi-family mortgage. These loans are subject to certain limits. Conforming loan limits are set each year by county. They’re the same in most areas, except those with high costs. In most places, the loan limits are:

  • Single-family: $647,200
  • Duplex: $702,000
  • Triplex: $848,500
  • Quadplex: $1,054,500

If you live in a high-cost area, you can check with Fannie Mae or Freddie Mac to see what the limit in your area is.

Good to know: Conventional mortgage requirements are more stringent than government-backed loan requirements. For instance, you’ll need a higher credit score to take out a conventional loan.

You’ll also need to pay PMI if your down payment is less than 20%, though it can usually be removed after you build up enough equity.

Credible can help you find a great mortgage rate on a conventional loan.

Credible makes getting a mortgage easy

Find Rates Now

It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.

FHA loan

At a glance: FHA loans are insured by the government. In general, the credit requirements are a little easier to meet and you can make a down payment as small as 3.5%. All FHA loans, though, require you to pay mortgage insurance premiums.

With an FHA loan, you’ll be required to meet conforming loan limits, but you might not have the same stringent credit requirements that you’d see with a conventional loan.

FHA loans come with a relatively low 3.5% down payment. However, you’ll pay mortgage insurance premiums for the life of the loan if your down payment is less than 10%. If you put more than 10% down, your mortgage insurance will be canceled after 11 years.

VA loan

At a glance: VA loans are backed by the U.S. Department of Veterans Affairs and only available to those who have served in the military or their surviving spouses. These loans don’t have the same credit requirements as conventional or FHA loans — and there’s no down payment requirement.

For those who qualify, a VA loan can be a good choice when financing a duplex. You don’t have to put anything down, and there isn’t a requirement to pay mortgage insurance.

However, the VA does impose an upfront funding fee — between 1.4% to 3.6% of the loan, depending on your down payment and whether or not you’re using a VA loan for the first time.

For investment properties

If you don’t live in your duplex, the situation changes. You’ll need a higher down payment — for conventional loans, the minimum is 25% — and the lender might want to see other documentation, such as local rental rates and occupancy statistics, that indicate the property will be profitable.

No government-backed mortgages

Government-backed programs like FHA loans and VA loans require that you live in the property as a primary residence. If you aren’t planning to live in the duplex, you won’t be able to access these programs.

Higher down payment requirements

Lenders require larger down payments — usually 15% minimum — when you’re not using a property as your primary residence. This is, in part, because investment properties pose a greater risk to lenders — if you fall into financial straits, you’re more likely to stop making payments on your rental property than your own home. 

Check out: Are Condos a Good Investment? Figuring Out the Pros and Cons

Using rental income to qualify for a duplex loan

It’s possible to use projected rental income when applying for a multi-family mortgage, even as a first-time homebuyer.

The appraiser will include a special form called a Small Residential Income Property Appraisal Report (Form 1025) with your appraisal report that takes into account several different things, including:

  • What each unit is likely to bring in for rent
  • The condition of the property
  • The value of comparable rental properties in your area
  • Neighborhood characteristics

Once that’s done, Fannie Mae lets you “count” 75% of the market rent when qualifying for a loan.

So, let’s say that your monthly mortgage payment for a duplex is $1,500, and you plan to live on one side while renting out the other side for $1,200, the market rent.

You can use $900 — 75% of the market rent — to reduce the amount of debt considered when calculating your debt-to-income (DTI) ratio.

Now, instead of a $1,500 debt payment impacting your DTI, only $600 is considered part of your DTI, which can help keep you below the 50% DTI limit.

Find out: Should You Buy a Bigger House? How to Make the Right Choice

Meet the expert:
Miranda Marquit

Miranda Marquit is a personal finance journalist with work featured on NPR, Marketwatch, FOX Business, The Hill, U.S. News & World Report, Forbes, and more.