Trying to understand the risk from the lender's chair, not the buyer's

The 75 percent figure is real and it is roughly as blunt as you're describing. On two-to-four-unit purchases, lenders commonly take the appraiser's market rent for the units you won't occupy and count about 75 percent of it toward qualifying income. The 25 percent that disappears stands in for vacancy and maintenance. Programs vary and lenders add their own conservatism on top, so confirm the actual treatment with the lender in writing.

FHA adds a second test on three and four unit properties, sometimes called self-sufficiency. The rental income from the property has to cover the mortgage payment on its own. That's a real screen and it knocks out plenty of triplexes and fourplexes in expensive markets where prices have run ahead of rents.

What neither test does is check whether you personally can carry the building empty. That's on you. The number to work out before you sign is your full payment with zero rent coming in, and then how many months of that you can cover from savings and income. If a fourplex payment is 3,800 and your rents were going to bring 2,700 of it, you want to know honestly whether you can write a 3,800 check for three or four months.

One thing that surprises new buyers: on a two-to-four-unit purchase you'll often be required to have a few months of the full payment in reserves anyway, which is the lender protecting itself and accidentally protecting you. Ask what the reserve requirement is early, because it's cash you need at closing on top of the down payment.

The month-two vacancy scenario is less scary than the tenant who stays and stops paying. Empty unit, you clean it and re-list. Non-paying tenant, you're in a process that runs weeks to months depending on your state's timeline and you're still paying the full note. That's the one that should size your reserve, not vacancy.

Quarry's framing is the right one for reserve sizing. Add that you inherit whoever is already there. On an occupied two-to-four-unit purchase you're typically buying subject to existing leases, and the seller's screening standards are now your problem. Ask for the actual leases, the payment ledger, and the security deposit accounting during due diligence, and treat missing paperwork as a finding rather than a nuisance.

The 75 percent haircut doesn't protect the lender against payment behavior either. It's a valuation adjustment on projected rent. What actually protects the lender is that you signed an occupancy commitment and personally guaranteed the note, so a tenant who stops paying doesn't reduce your obligation by a dollar.

On the buyer side, the number worth computing is your break-even months, meaning reserves divided by the full payment less what your own income can absorb. If that's under three on a building with an eviction timeline of two to four months in your state, and timelines and required notice periods differ significantly state to state, you're thin. Tenant law and eviction procedure are areas where you want a local attorney rather than a forum.

One more piece nobody has raised: your insurance changes. A primary residence policy on a duplex you partly rent isn't the same product as a homeowner's policy, and you'll want loss of rents coverage in it. Landlord or dwelling fire policies price differently and often carry lower contents coverage than owners expect. Get the quote before you're under contract, because on a fourplex it can move your payment by a meaningful amount.

Security deposit accounting is where I've seen the most sloppiness in seller-provided files. Many states require deposits held in a specific way and transferred at closing with notice to the tenant, and the rules differ by state. If the settlement statement doesn't show the deposits coming across, you can end up owing money you never received when someone moves out. Ask for the bank record, not the seller's spreadsheet.