Credit Unions offering 5% down??

Question

In a recent podcast episode there was talk about certain credit unions now offering mortgages to investors that only require 5% down. Has anyone figured out which credit unions are offering this product??

Zach Lemaster · Answer

@Colleen Weaver

Thanks for the interest in this loan product. We are happy to provide you contact information for the credits unions that offer this product. This is not a Freddie/Frannie product. This is a portfolio loan offered by local credit unions where you can buy up to 5 pure investment properties with as little as 5% down if you qualify, which you do have to qualify still with DTI, credit, reserve requirements, etc.

There are different credit union options that would be best to connect with based on where you are investing and your situation, so that is why it's important to connect with our team to guide you on the right path on where to apply so you are not wasting your time and having multiple unnecessary credit pulls.  Just send your RTR rep a message and we'll get you on the right track.

This is an excellent loan option that will allow investors to scale quickly and maximize tax benefits!!

Andrew Freed · Answer

@Colleen Weaver - I would assume you are referring to a 5% down owner occupied loan, e.g. a house hack of sorts. Any loan under than 20% down (other than hard money loans) normally requires that it is an owner occupied home, e.g. you have to live in it for a year. Investment loans require that you have at least 20% down. Additionally, most investment loans on multis now require at least 25% down.

Lastly, going back to your point, I do work with some small local credit unions and banks that offer a 5% down owner occupant on a multifamily. Also Fannie Mae and Freddie Mac just released a 5% down conventional on an owner occupant as well hence they are out there, however just be prepapred to live in the property for a year. Best of luck on building your portfolio.

Benjamin Sulka · Answer

Colleen,

This is interesting. I've never heard of this but I hope someone replies that has heard of it!

Any 5% down loan that I've ever heard of is owner-occupant only.

All the best!

Zach Lemaster · Answer

@Erik Browning for which loan product?  The 5% down credit union investor loan?  There are many unique options available, but I assume you are referring to that one.  I am not the lender, and I don't have a product matrix.  We are the seller with many different lender resources that we share with our buyers.  The buyer can ultimately use whatever lender they want.

Here is what I know on the 5% down investor loan.  We've had over 100 investors close loans with this product.

-Portfolio loan unwritten and held with local credit unions

-No pre-payment penalty and no PMI

-Non owner occupied, this is a true investment property loan, and you can do up to 5 homes at once with it!

-30 yr am, 10 yr term

-Each individual can buy up to 5 homes at one time with this product

-As little as 5% down, but you can put more down if you want to.  You can combine this 5% down option with our 10% kickback on select new build homes to actually get paid 5% to invest in a property with no money down!  That is where it gets really creative!

-Available on SFR and Duplexes

-Available in about 30 states, but not all

-Below 43% DTI, min 680 credit, rates vary based on credit, etc.

This is about all I know on this loan to the best of my memory.  We've had many investors that used this product to rapidly scale their portfolio by buying more REI with less money down on each property.  For example, instead of putting down 25% on one property, they put 5% down on 5 properties to spend the same amount of capital.  This allows to 5X tax benefits this way, especially if doing cost seg.  Obviously each person needs to determine if this is right for them & they need to actually qualify for the loan.  Also, cash flow will be lower with a higher loan amount on a property.  It's our goal at Rent To Retirement to bring the best turnkey deals across the country to our marketplace and to help our investors find the best financing options that meet their goals.

Hope this helps.  Reach out with any questions.

Erik Browning · Answer

Can you please send me the product matrix?

Colleen Weaver · Answer

Hi @Andrew Freed thanks for the response! No- I am not referring to owner occupied. They were discussing specifically investor loans which caught my attention because I have always had to put 25-25% down. I may have misheard but it didn’t sound like commercial loans either- it sounded like single family investor owned properties. They said it is a new loan product being offered in todays environment. Just curious if anyone has done more research on it.

Credit Unions offering 5% down??

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