Should I buy a duplex or rental as my first home?

Buying a duplex or small rental as your first home can be a smart move if you are comfortable being a landlord and can qualify for the property. When you live in one unit as your primary residence, you typically qualify for owner occupant financing with a much lower down payment, sometimes as low as 3 percent for conventional loans or 3.5 percent for FHA. Rental income from the other unit may help offset your mortgage, though lenders often count only a portion of that income for qualification. The tradeoff is more responsibility, shared walls or yards, and tenant management. It works well for buyers who want to build equity while keeping housing costs lower and are ready for the landlord role.