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Michael Bieler
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Mortgage Loan questions

Michael Bieler
Posted Jun 2 2022, 05:47

Hey guys, so I am an active investor in Florida. I have a few questions regarding mortgage terms. My lender always MUST have 25% down for a duplex. 30% down for a tri or more. I feel like this is really slowing me down. If I was even able to do 15-20% down that would really help. Is this normal? Are their any good lenders out there who will take less down payment? 

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Katherine Blazer
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Katherine Blazer
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Replied Jun 2 2022, 06:30

Nope. So most of the groups I work with require 20% down on single-family 1-4 units for a purchase or rate and term refi, 75% for a cash-out refi. 

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Reid Chauvin
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Reid Chauvin
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Replied Jun 2 2022, 11:29

Hi @Michael Bieler - conventional lending requirements (which is what the majority of lenders follow) dictate a minimum down payment of 15% for 1-unit investment properties (though the interest rates currently require discount points in this rate environment, so most people opt to put 25% down), and 2-4 unit investment property purchases require 25% down. There may be some lenders who require less than 25% down on a multi-unit Invesment property purchase, but chances are that you will be paying for it in higher interest rate or fees. 

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Sasha Mohammed
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Sasha Mohammed
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Replied Jun 2 2022, 11:38

yep! what @Reid Chauvin said! sounds like conventional financing to me. There are other loan options that do not go to fannie/ freddie, which would allow for lower down payments. BUT! that typically also means higher risk for the lender, which translates to higher rates and fees for you. it's all a trade-off. 

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Tanner Connelly
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Replied Jun 2 2022, 11:53

I've seen these go for 3.5% down or even 5% down....sounds like whichever lender everyone is using has harsh guidelines. 

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Scott Wolf
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Scott Wolf
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Replied Jun 2 2022, 12:59
Quote from @Tanner Connelly:

I've seen these go for 3.5% down or even 5% down....sounds like whichever lender everyone is using has harsh guidelines. 


 You're seeing investment loans for those numbers? Because that sounds like owner-occupied to me.

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Chris Mason
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Chris Mason
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ModeratorReplied Jun 2 2022, 13:24
Quote from @Scott Wolf:
Quote from @Tanner Connelly:

I've seen these go for 3.5% down or even 5% down....sounds like whichever lender everyone is using has harsh guidelines. 


 You're seeing investment loans for those numbers? Because that sounds like owner-occupied to me.

FYI during the 2020/2021 refi boom, a lot of new people entered the mortgage industry, primarily to do refinances ("two week wonder school" type quick/down/dirty refi-only training programs), the demand for which had gone up over 500% for obvious reasons. 

Now that owner occ rates are in the 5s, and investment property right where you'd expect in relation, those refinances have all gone away, but the new loan officers are still around. But they're being forced to pivot to purchase business, which they've never really done before, and weren't trained to do during the "two week wonder school," because if they can't do that, then they have to go back to their old job, which they evidently didn't particularly enjoy. So you see them saying silly things about down payments, down payment gifts, timing, realtors, etc, because none of those things exist on refinances (that's the pattern, it's always something that would never come up on a refi, because these folks have in fact done hundreds of order-taker refinances, but that's basically all they've done). 

www.nmlsconsumeraccess.org is where you can view someone's mortgage license history, and self-stated employment history. You can usually find the NMLS number on someone's BP profile, and if not they're breaking the mortgage rules (in general licensed professionals have to have that number readily visible, be they realtors or mortgage professionals or plumbers). 

Here's what that website looks like:

And you plug in the NMLS number, and to use a completely random example of someone that might say silly things about down payment requirements for a rental property, things that if we didn't know better might look a lot like encouraging mortgage fraud (but I don't think that's the case, I think it's inexperience):

The point isn't to call anyone out, the point is that it falls on all of us, always, to do due diligence when evaluating things we read on the intertubes, regardless of where.

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Michael Bieler
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Michael Bieler
Replied Jun 2 2022, 14:20

Thank you all for the great info.  Appreciated! Hoping to find a more lenient lender. at least 20% lol

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David P.
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Replied Jun 2 2022, 23:35

A good lender is important. When i first started out in real estate and got my first duplex my idiot lender made me put down 35% down. My next deal for my own personal home she made me put down 35% down again. Looking back i could of so many more deals back during the last crash if i had more downpayment without using it all. I later decided to change lenders and that was able to go with 25% down since for investment properties. 

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Issac San Miguel
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Issac San Miguel
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Replied Jun 3 2022, 05:31
Quote from @Michael Bieler:

Hey guys, so I am an active investor in Florida. I have a few questions regarding mortgage terms. My lender always MUST have 25% down for a duplex. 30% down for a tri or more. I feel like this is really slowing me down. If I was even able to do 15-20% down that would really help. Is this normal? Are their any good lenders out there who will take less down payment? 

with hard money lenders, a few factors like your activity level and the deal/asset itself determine the down payment. 

Down payments for my clients recently have been in the 11% to 18%. Of course, some are as high as 25%-30%. It all depends on the value in the project. 

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Wayne Brooks#1 Foreclosures Contributor
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Wayne Brooks#1 Foreclosures Contributor
  • Real Estate Professional
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Replied Jun 3 2022, 05:39
Quote from @Tanner Connelly:

I've seen these go for 3.5% down or even 5% down....sounds like whichever lender everyone is using has harsh guidelines. 

That’s only for fha, owner occupied.

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Aleksandra Sokolova
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Aleksandra Sokolova
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  • Miami, FL
Replied Aug 2 2022, 16:12

Seller finance as an option, hard money lender (but they charge higher interest rates),  shop for other lenders or connect with more real estate agents so they might recommend someone. I worked with multiple investors and some of them have great lenders and some of them are willing to help with DP.

Hope it helps

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Kevin Woodard
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Kevin Woodard
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Replied Aug 2 2022, 16:55

@Michael Bieler If that’s how they like to mitigate risk, it’s well within their right. It’s also within your right to shop around, which you are doing. Like @Issac San Miguel stated, that's more of the norm I have seen. With capital tightening, due to current economic trends, I would expect 15-25% down depending on the complexity of the deal (e.g. simple SFH - 8+ unit MF deal).

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Ryan Deasy
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Ryan Deasy
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Replied Aug 3 2022, 09:45

@Michael Bieler exact issue i ran into until i found hard money. i was able to get in with 10-15% down and its been a huge help for me. saving 5-10% down is huge, as i am sure you would agree. happy to share more info