Multifamily loans.

The line at five units

A duplex, triplex or fourplex is residential property. It finances through conventional, FHA and VA programs, it appraises on a residential form, and if you live in one of the units it can be a primary residence.

At five units it becomes commercial. Different appraisal, different documentation, and underwriting shifts from you to the building: what it collects, what it costs to run, and what is left over to service debt.

House hacking a two-to-four

Buy a small multifamily, live in one unit, rent the others. It is the most accessible entry into real estate investing that exists, because owner-occupied programs apply and much of the rent from the other units can usually be counted toward qualifying.

You do have to actually live there. Occupancy is a representation you make at closing, and misrepresenting it is fraud rather than a technicality.

Five units and above

Expect a rent roll, trailing operating statements, and a debt service coverage test on the property’s net operating income. Expect the lender to look at the sponsor — experience, liquidity, and what else you own. Expect an entity to be the borrower and a personal guaranty to be discussed.

Questions people ask

Can I use an FHA or VA loan on a duplex?

Yes, on two to four units, if you occupy one of them. FHA and VA both allow it and it is a common way in.

Does the rent help me qualify?

Usually a portion of it, supported by leases or by the appraiser’s market rent analysis. How much varies by program.

What if I do not want to document my personal income?

On non-owner-occupied one-to-four unit property, a DSCR loan qualifies on the property’s rent instead of your income. That is often the cleaner route for an investor with several doors.

Program availability varies by state, by unit count and by occupancy. A licensed loan officer will confirm what is available for your situation.