Mortgage  Question?
Can You Qualify for Owner Occupied Mortgage on Duplex?

Can you qualify for an owner occupied mortgage if you live in one unit of a duplex and rent out the other unit?

Harry Jensen
, Trusted Mortgage Expert with 45+ Years of Experience
Edited by Michael Jensen

As long as you plan to live in one of the two units of a duplex, the mortgage is classified as an owner occupied loan even if you rent out the other unit. This is beneficial because the interest rate and qualification guidelines for the mortgage on your primary residence are more favorable than for a loan on an investment property.

The mortgage rate for an owner occupied loan is lower, which reduces your monthly payment or enables you to qualify for a higher loan amount. Paying a lower rate also reduces your interest expense over the life of the loan, which can really add up for a 30 year mortgage.

The down payment required for an owner occupied mortgage is also lower. For example, you are only required to make 15% down payment to qualify for a loan on a duplex that is your primary residence as compared to a 25% down payment for a duplex that is a rental property.

The lower down payment requirement means you need to come up with less funds to buy the property, assuming you intend to occupy it, which makes home ownership more attainable. In general, it is easier and less expensive to qualify for the mortgage on an owner occupied duplex as compared to a duplex that is used as a rental property.

The table below shows interest rates and closing costs for top-rated lenders in your area. We recommend that you contact multiple lenders to confirm their qualification requirements and mortgage terms for a duplex.

Current Mortgage Rates in Ashburn, Virginia as of April 12, 2024
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Rate data provided by Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes or insurance premiums. Actual payments will be greater with taxes and insurance included. Read through our lender table disclaimer for more information on rates and product details.

There are a couple of additional points to keep in mind if you are considering buying a duplex. First, it is important to understand how lenders calculate rental income for the unit you do not occupy, if you want to use that income to qualify for a mortgage.

In most cases, lenders use the lower of 75% of rental income according to a signed lease agreement or 75% of income according to a rental appraisal report (lenders also use rental income as reported on Schedule E of your tax returns but this usually only applies to a refinance). This guideline may come as a surprise to applicants that intended to include 100% of projected rental income in their mortgage application.

Lenders apply a 25% discount to the projected rental income to account for vacancies and unexpected property costs. Additionally, if you have less than a year of experience managing an investment property or receiving rental income, then the lender may limit the rental income that is added to your application, which may reduce the mortgage amount you qualify for.

Review How to Get a Mortgage on a Multifamily Property

The final point to keep in mind about buying a duplex -- regardless of if it is your primary home or an investment property -- is that you may be required to hold savings in reserve at closing. The reserves requirement for a duplex can be up to six months of total monthly housing expense including your mortgage payment, property tax and homeowners insurance. This can be a significant financial commitment in addition to your down payment and closing costs.

In closing, buying a duplex as your home offers several benefits including rental income and more attractive loan terms as compared to an investment property. Along with these positives, you should also make sure to fully understand the unique qualification requirements and potential extra costs required to qualify for the mortgage.


"B2-1.1-01, Occupancy Types."  Selling Guide: Fannie Mae Single Family.  Fannie Mae, May 1 2019.  Web.

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About the author
Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

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