Don't have 25% for down payment

8 Replies

I am looking to purchase my first multi family property in Worcester Ma which will be a buy and hold. The only thing holding me back is a down payment. I have some money but not the 25% which seems to be the amount needed. Does anybody have any insight / tips / creative ideas on how I can buy a three family with less than 25% down? Any suggestions would be greatly appreciated. Thank you

Or you live in it which would require significantly less down. Don’t forget about closing costs and reserves. You need downpayment, closing costs and reserves if you’re using a loan

The best option, as @Caleb Heimsoth mentioned, is probably to "house hack" by living there. There are FHA loans available that only require 3.5% down. You would be required to live there for at least a year.

If living there is not an option for you, you can attempt to negotiate a carryback from the seller.  Essentially, you would ask them to loan you a portion of the down payment which would be secured by a second position mortgage.

Third, you can try to raise money for a down payment from private lenders.  This would be the same idea as a seller carryback, except that you would actually be raising money instead of simply asking the seller to accept a deferred payment in exchange for interest.

Finally, you can try to find a partner.  This can be a good option (especially if the other option is not investing at all), but I think that you should consider it as a last resort unless you are also getting something other than money (i.e. someone with a lot of experience who can teach you).  If all you are getting from a partner is money, giving up equity is less appealing to me if there are other good options.

@Jeff Wood

If you are looking for a pure investment (non owner occupied) the 25% may be a slight barrier. There have been great suggestions in this thread- about forming a partnership (if you have some of the downpayment) or also consider finding the deal (then the $ will come) 

Hi @Jeff Wood ,

I think it's been said, but you definitely have options:

1. Find a partner and cut them into the deal

2. Live in the property as a primary residence and also rent it out to renters. That will lower your downpayment %.

3. Get the 25% needed by saving more aggressively and finding ways to bring in extra cash. Heck, deliver pizzas 2 hours after work every day.

Best of luck man!


I don't know how much you have already done, but I would suggest you also try shopping around a bit more.  You should be able to find a local credit union to give you a loan with 20% or less down.  


Here's the easiest solution that does not require a partner. LOC's for the down payment with a commercial loan for the rest. What's even better is if you can force appreciation through value add or increasing the rents, then do a cashout refi, and pay off those LOC's and get your cash back = infinite cash on cash return!

Always with my best,

Christopher Richardson