1st- time investor - Down Payment Options

8 Replies

Looking to purchase my first piece of investment property. I'm not looking forward to paying 25% down. Are there any options to me putting less money down so I can save it for incidentals?

@Nekole S. there most definitely are low down payment options, although they primarily involve you owner occupying. My personal favorite is the 5% down conventional loan which you can use on anything from a condo up to a 4 unit! One of my clients recently used this to purchase a 4 unit in Berwyn. The conventional loan is great because you can buy more beat up properties and get a good equity position from day one. 

You can also look into the FHA 3.5% down loan. These are much more challenging to use as the property has to be pristine. By definition, most of us investors are looking for fixer uppers, so the FHA can take a while to deploy.

There is also the VA loan if you are military. You can actually buy with 0% down with this loan, and it is a pretty cool loan!

@John Warren What's the name of the conventional loan program that allows 5% down in which I do not have to have owner occupancy? I was informed through my potential mortgage lender that there is no way around it besides me living in the property.
@Nekole S. House hack a multifamily unit. That’s a good way to get a low DP and get started. If you’re buying a house as an investment property then 20-25% will be common. There might be some private lender who lend on a 10% acquisition, 10% rehab. But then the fees are higher. Don’t forget seller concessions, it can cover some of the down payment and closing costs. Ask your agent what % of seller concessions you’re allowed to ask up to. Happy Hunting!

If you aren’t going to live in the property for at least a year I don’t know of any lender that will give you a loan for less than 20%. 25% if it’s a duplex on up.

@Nekole S. sorry if it sounded like you don't need to owner occupy. You absolutely would have to owner occupy in order to qualify for the low down payment program.