Question on money down.

9 Replies

So I have my first rental in sight, I called lenders and both said since it’s a full investment property I have to put down 25%. I was just wondering do I have to put 25% down or can I put down 20%. Putting down 20% would keep me from being in a pinch and I still have a little of work to do on the property. I’m currently looking in the pittsburgh, pa area. Any information helps. Thank you kyle!

Shop around to different lenders. You should be able to find an 80/20 somewhere. Don't forget about closing costs though unless they will let you roll them into the loan. If you only have a 5% margin closing costs could eat that up depending on the price point.

Call S & T bank. I constantly hear they're doing the most work with investors right now. I have no relationship with this bank.

@Kyle Jones if you have any sort of LOC you can use that money for your down payment so essentially you have used other peoples money to purchase. The idea is to use OPM for infinite return and to grow rapidly

@Kyle Jones I've done 20% as long as it's currently leased. Even if it's not they'd consider it, but would also consider strength of borrower. 

Go to the local banks. Usually you'll be in a commercial loan 5 year fixed rate then adjustable after that. 15 year term normally, some will do 20. 

They change up what they do all the time. So you have to stay on top of them and keep asking around (even if you've already done that just a few months ago)

Fannie Mae/Freddie Mac guidelines allow for 20% down on single family investment property purchases. 25% down if its a 2-4 unit investment property. So if you are buying a single fam property, getting 20% shouldnt be an issue. However if its 2-4 fam then you have no choice but to put 25%, at least if you are dead set on going Fannie/Freddie. If you go portfolio, there are plenty of options that will only require 20% down on 2-4 unit properties, albeit at the cost of a higher rate. Whether its rented or not makes no difference in the LTV, its only needed if you cant qualify with carrying the full mortgage payment on your own. As for the FNMA Homestyle Renovation loan, you can use it for an investment property, but I believe they only allow single family investment properties, anything that's 2-4 has to be primary residence. Below are the guidelines from that program, it only shows one LTV for a rental and that's for a single family residence. In that case you can go as high as 85%, but keep in mind this is a rehab loan, so you would have to be doing renovations as part of the loan to get that.

The following are maximum LTV/CLTV/HCLTV ratios for purchase or LCOR when HomeStyle Renovation mortgages are underwritten with DU* (note that borrowers can also qualify for up to 105% CLTV with eligible Community Seconds®):
- One-unit principal residence to 97% LTV/CLTV/HCLTV with FRM; 95% with ARM (Available in DU on March 17) (Note: For LTVs > 95%, on purchase transactions, the borrower must be a first-time home buyer unless combined with HomeReady; for LCOR transactions, the loan must be owned or securitized by Fannie Mae.)
- Two-unit principal residence to 85% LTV/CLTV/HCLTV with FRM/ARM
- Three- and four-unit principal residence to 75% LTV/CLTV/HCLTV with FRM/ARM
- One-unit second homes to 90% LTV/CLTV/HCLTV with FRM/ARM
 MH LTV/CLTV/HCLTV ratios principal residence to 95% FRM/ARM; second homes to 90% FRM/ARM (Note: 105% CLTV is not permitted with Community Seconds)
    - One-unit investment properties:
 Purchase up to 85% LTV/CLTV/HCLTV with FRM/ARM
 LCOR up to 75% LTV/CLTV/HCLTV with FRM/ARM

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