Multifamily properties are the fastest way to build wealth through real estate in California.
Buy a duplex with 5% down. Live in one unit. Rent the other. Your tenant pays most (or all) of your mortgage.
Better Offers Inc (CA DRE #01212512) is a California mortgage broker that compares financing options for California multifamily properties.
The 2-4 Unit "House Hack" Strategy
The loophole: If you live in one unit, it's owner-occupied financing -- even though it's an investment property.
Benefits:
- 3.5% down (FHA) or 5% down (conventional)
- Lower interest rates (owner-occupied rates)
- No landlord experience required
Requirements:
- Must live there for at least 12 months
- Property can't exceed 4 units
After 12 months: Move out, rent all units, buy another multifamily and repeat.
See FHA vs conventional comparison
Illustrative house-hack scenario: An owner-occupant buys a duplex, lives in one unit, and rents the other. Whether rent offsets the mortgage depends on the purchase price, financing, vacancy, repairs, taxes, insurance, utilities, and actual rent collected. Run the complete property budget before relying on projected cash flow.
Financing Options by Property Size
2-4 Units (Small Multifamily)
Owner-Occupied: FHA 3.5% down / Conventional 5% down / VA 0% down (if veteran)
Investment (Don't Live There): Conventional 25% down / DSCR 20-25% down
5+ Units (Commercial Multifamily)
Commercial Loans: 25-30% down, based on property's NOI, shorter terms (5-10 year balloons), higher rates (7.5-9%)
DSCR Loans: 25-30% down, based on DSCR ratio (1.25+ typically), 30-year fixed available
Real Numbers: California Duplex Purchase
Example: Duplex in Riverside
Get a DSCR Loan Quote
See investor loan options based on property income, rental strategy, and down payment.
CA DRE #01212512 | Free, no-obligation quote
- Purchase price: $650,000
- Down payment (5% conventional): $32,500
- Loan: $617,500 at 6.75%
- Monthly payment (PITI): $4,350
Rental income: Unit 2 rented at $2,200
Your housing cost: $4,350 - $2,200 = $2,150/month
vs. renting a similar unit: $2,800/month. You save $650/month while building equity.
How to Qualify
Income: Lender counts 75% of market rent on rented units toward your income. Example: $80K income + $2,200 rent x 75% = $99,800 effective qualifying income.
Credit Score: FHA 580 min (620 may improve pricing) / Conventional 620 min / DSCR 660-680 min
Reserves: Owner-occupied 2-6 months / Investment 6-12 months per property
California Markets for Multifamily
Best for cash flow: Inland Empire, Central Valley, Sacramento area, smaller coastal cities (Ventura, parts of San Diego)
Appreciation but low cash flow: San Francisco, LA west side, OC coastal, Silicon Valley
Common Mistakes
- Overestimating rents -- use actual market comps, not Zillow estimates
- Underestimating expenses -- budget for vacancies, maintenance, property management, capex
- Buying in rent-controlled markets without knowing rules -- LA, SF, Oakland have strict rent control
- Not screening tenants properly -- bad tenants = nightmare
- Violating the 12-month occupancy requirement -- don't cheat, it's mortgage fraud
FAQ
Can I buy a triplex with 5% down? Yes, if you live in one unit.
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What if one unit is vacant? Lender uses market rent appraisal (75% of market rent).
Can Better Offers uses a VA loan on a fourplex? Yes -- 0% down, live in one unit, rent the other 3.
Can I 1031 exchange into a multifamily? Yes, as long as it's held for investment.
Get Multifamily Financing
Whether you're house-hacking your first duplex or buying a 20-unit building, we can help.
Better Offers Inc | CA DRE #01212512