Purchasing a property with two homes may be a challenge when it comes time to get it financed. Since the value of a property is based on current prices of comparative homes on the market and sold homes, finding a comparable to compare to can be difficult with two homes on one property. Even appraisers find a property with two homes more difficult to evaluate and if the property has outbuildings, even though they have value, may not be able to be included in the final valuation that will go to the lender.
How will you use the Property?
How you intend to use the second home can be a factor when seeking a mortgage for two homes on one property. If you are using it for income, the lender may consider it investment income and will require a mortgage that indicates, thus. This can be in your favor if one of the units has been steadily rented as it shows a stable income with a determinate amount.
Rent on the second home can be shown as income and will boost your borrowing power when you seek a loan. If on the other hand, if you intend to use one of the homes as a guest house or in-law residence it will be deemed residential and not investment property and determine the type of mortgage you can get.
How is your Credit?
Even though lenders are lending, they are being tight with their money. Unless you have, a credit score above 640 they generally will not give you the time of day. However, if you have a strong credit score that exceeds 740 you should be able to get a loan for two homes on one property, although you may require a sizeable down payment.
Sellers, who have these properties, often find that they are in the same situation as buyers because if a buyer cannot get a loan, a seller cannot sell. Since buyers sometimes have difficulty acquiring a loan under uncommon circumstances, sellers may offer owner financing if the property they have is free of a loan. This can be a perfect situation for you and the seller if it is doable.
Do you have a Knowledgeable Appraiser?
Even seasoned appraisers can find appraising two homes on one property so when you seek an appraiser ask them if they are familiar with these types of properties. If they are not, look elsewhere for the most experienced appraiser you can find. The challenges of appraising and the need for an accurate, fair appraisal can be the key to getting a mortgage under uncommon circumstances.
Are you eligible for an FHA Loan?
Although, as with any loan, there is no guarantee that a lender will approve a mortgage, there are instances where the FHA will make a loan when two homes are on one property. Again, this can hinge on the particular property, the size and prior use of the homes, and the amount of land on which they sit that is a contributing factor in the overall value of the property. Available with a down payment of three and a half percent, an FHA loan may be a viable option when purchasing two homes on one property. Bear in mind, though, you will be required to live in one of the homes and cannot use them both as rental properties with an FHA loan. If you want to purchase two homes on one property for an investment, this loan will not work for you.
Are you eligible for a VA Loan?
Like an FHA loan, a VA loan may be available to qualifying veterans for the purchase of two homes on one property. Although they do not make loans for an investment property, they do for multi-family homes. Again, you will be required to live in one of the units. A no down payment VA loan could work for you to purchase two homes on one property.
Do you live in a Rural Area?
Two homes on one property are often found in rural areas and the USDA is familiar with these properties. You may be able to purchase two homes at once with a USDA loan if you meet their criteria and the property is in a rural area. When shopping for a loan with which to purchase two homes on one piece of land knowing your options and the loans that are available for your situation can help you make the deal.
Do you have a Sizeable Down Payment?
With stellar credit and 25 percent down buying two homes on one property should not be an issue. If either of the homes has a record of income, the better for you. As with any property with two homes, the appraisal will be a key factor in the direction made by the lender.
Is this the best Purchase for you?
As with any property, you must weigh the pros and cons of the purchase. You may find a lender who will give you a conventional loan if you are creditworthy for the loan on its value. You need to be very clear about your use of the property when seeking a loan for a unique property and whether you will be in residence of the property will be a big factor in how you are viewed by the lender.
