down payment on loan or asking price?

Question

so i’m trying to purchase a rental property for the asking price of $230,000 and i currently have $62,100 laying around and need a loan of $167,900. i have reached out to multiple lenders and investors and they want me to put down 25% - 30%. my question is are they asking me to put down the 25% - 30% down on the asking price of $230,000? which would be $57,500 (25%) - $69,000 (30%)... or the loan amount that i need which would be $167,900 - 25% ($41,975) - 30% ($50,370)???

obviously i hope they mean on the loan amount i’m asking for ($167,900)

thank you in advance :)

obviously i hope they mean on the loan amount i’m asking for ($167,900)

thank you in advance :)

Winston Covington · Answer

Hi Adrien, when purchasing a property the lender will require that your down payment be based on your contract purchase price.  Example - Say you’re buying an investment property for $ 100,000 and the lender requires a 25% down payment, your down payment will be $ 25,000.

When purchasing a property that you will not be living in as your primary residence ( Non Owner Occupied ) it is common today to see the Banks requiring a 20 to 30% down payment depending on income, credit and debt ratios. Furthermore, interest rates are normally higher for non owner occupied loans vs owner occupied loans.

Hope this helps.

Jerry Padilla · Answer

@Adrien Gonzales

The down payment is required on the purchase price. For example if you are purchasing a single family for $230k you can go as low as 15% down, which would be $34.5k. If this property is a multi-family, you would be required to put down 25% - 57.5k. There will also be closing costs that need to get paid as well as reserve requirements - depending on how many properties you own. The down payment has to be sourced from your own funds and the seller can pay up to 2% of your closing costs. These are all conventional requirements, if you are planning to put the property in your personal name.