What is the best loan to go with?

4 Replies

Hello everyone my name is Shelby Cucco. I’m new to BiggerPockets. So glad I found it, there is so much information to soak in here. I have a question on financing. I am looking at a property that has a single family home and a duplex on the same property. My question is which type of bank loan would let me put the smallest amount down? Not sure which type of loans I can get since there are multiple houses on site. Or is it better to put 20% down? Everyone’s response very appreciated. 

Thank you in advance,

Shelby Cucco 

are you buying the property to live in or  as an investment property ?  are there 3 utility meters ?   I believe most lenders  will classify this as a 3 plex  ......also what is likely  price ?

If you plan on living in the property (duplex) you can apply for the FHA loan which is 3.5% downpayment. However, this will enforce you to pay private mortgage insurance, PMI, which would be active till the loan is paid off, so you would have to refinance once you reach about 20% equity in the property.

If you don't plan on living in the property, you can apply for a conventional bank loan (20-25% downpayment), do seller financing (unlimited options available), find a partner/private lender, or etc. 

BP is a great resource for providing you information that deals with financing a property. 

Good Luck! 

Thank you for your reply! I’m not sure on the meter. It will definitely be an investment property. Asking price is 195,000. According to comps I can rent for around 2,400. Im leaning towards conventional and do 20% down to avoid pmi. Hopefully I can work out something with seller with an owner finance. 

Shelby - thanks ....you may need to increase the down pmt to 25%  as many lenders ( not all )  have a maximum  75% ltv  for investment 2-4 family properties ...if you havent already done so - locate a lender to work with / get  specific assurances  on what they can offer and  get  pre approved and  ask them whatever questions  you have regarding this  specific property ......(  due to the uniqueness of the property - you might  try locating a lender thats local to the property in question )