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Mortgage for two-family home which buyer wants to occupy as a single family home

If home is legally a two-family, but the buyer wants to convert to a single family home, what guidelines will the underwriter follow? Those relating to two-family homes or single family homes. the home would be owner-occupied. I assume that the current legal use (2-family) would apply, regardless of intent of buyer, but if possible, I would like to purchase with the lower down payment requirement of single family home. by smiden_276_554 from Buffalo, New York. Sep 1st 2011 Reply

Nancy J Releford (nancyreleford)
#4 ranked lender in Tennessee - 232 contributions

If it is a 2 family home it would have to stay that way unless you tried to have it rezoned!

Sep 1st 2011
William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,728 contributions

Your best bet is to purchase using FHA, 3.5% down with mortgage insurance... this way, it doesn't matter... you still get the great rates FHA is offering right now, and you can keep it zoned as a duplex. FHA, 1-4 units, owner occupied, there is no "Pricing Hit" for these property types. If you purchase using conventional financing with 20% down, you will not have mortgage insurance, however your rate would be about 1/2 % higher. and the loan does cost more because there is a "Pricing Hit" for 1-4 units... (the pricing hit is 1% of the loan amount for most lenders)

Sep 2nd 2011
Robert Hanson (rhanson)
#38 ranked lender in Maryland - 646 contributions

Unless he home were legally converted prior to you purchasing it, you are correct that you would have to buy it under 2 family home guidelines which usually do require a slightly larger down payment. I'm happy to help with the financing or just give you advice. If you need more information, or a competing rate quote call, email or use my live support button to discuss or get in touch with me. Web Address for live chat or quote is: Email is and direct phone is 240-752-7549. Good Luck -- Rob Hanson

Mar 14th 2014
Edward Fallon (edfallon)
#90 ranked lender in Pennsylvania - 143 contributions

You could also purchase it using an FHA 203k mortgage, and finance the money needed to convert it to a single family home.

Jun 23rd 2014
Chris Neuswanger (mtnmortgageguy)
#93 ranked lender in Colorado - 92 contributions

I would digress from some of the other advice given here. It may depend on the layout and physical configuration of the home. Can the two units be easily connected with minor changes? Is the second unit more of a mother-in-law unit or is it a full 50/50 split? If its a 50/50 and not easy to combine the two you might have a two family.I've actually had two unit properties with a full 2-br apartment with exterior entrance that underwriters insisted had to be viewed as a single family with accessory unit (which is a Fannie designation). The rules are a little gray in this area but shop around and ask if this can be viewed as a single family with an accessory unit (if the property lends itself to that description).

Dec 29th 2014
Mike Silkworth (msilkw_195_870)
#31 ranked lender in Michigan - 527 contributions

FHA will allow you to finance at 3.5% down just like a single family home. Beware, converting the home to one-family may reduce the value. Doing that could put you in a bind if you want to sell or refinance.

Jun 29th 2015
Jesse Stroup (jessestroup)
#4 ranked lender in Idaho - 593 contributions

Its call in the zoning of the property. You can buy it as a two family (2 unit) home and contact your city, county and bank to see there are any limitations.

Feb 23rd 2016
Michael Diaz (sincityloandr)
#60 ranked lender in Nevada - 66 contributions

the 2 unit shouldn't affect the down payment amount. T Here are loans now that you can include the renovation of the home through the loan. If you want any info just email or get info at

Jan 29th 2018
Gregg Pomeroy (G.Pomeroy)
#50 ranked lender in Connecticut - 13 contributions

Hello, your best option is to buy it as a two family. You can always try to change it to a single family down the road but as a two family you will be allowed to use the potential rent from the second unit to help boost your income to qualify for the loan. The best option would be an FHA loan. Right now rates are down around 4% on an FHA loan if your credit is good, higher if you have a lower credit score. You only need 3.5% down payment with an FHA loan & your allowed to roll closing cots in using a sellers concession. If you have any questions you are welcome to reach out to me at 203-299-2034, you can call or text that number day or night. Im available via email as well at: My website is:

Apr 5th 2018
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