Hi guys, I am new to the site and I am exploring the possibilities of investing in a rental property over the coming year. My biggest concern however is that I may struggle to get approved of a mortgage based on my low income reflected over the past few years. I am wondering if lenders allow you to pay a larger down payment to minimize the amount that you would need to borrow. I figure if people can buy houses with cash they perhaps they allow for something like this. Sorry if this is a silly question, I am still totally new to this and trying to figure out the basics.

Thanks!!

@Mark Dolan Yes you can put as much down on a property as you would like. The higher the down payment the less you would need to borrow, which would decrease your monthly loan payment. Also, if you are concerned about a lender's willingness to approve a loan, offering to put down a higher down payment is a way to lower the risk for the lender and thus increase the likelihood of getting approved.

There are a lot of opinions and schools of thought on high down payment vs. low down payment. The general debate is in regards to the less money you put into acquire a property the higher your return potential, but you also assume a little more risk by having less equity in the property. I would talk to a few lenders before assuming they would be hesitant to approve a loan, you might be surprised. Bottom line, if it would require a higher down payment to get the loan and you've got a great deal sitting in front of you then do what you need to do in order to secure the property. I would make sure to evaluate a deal using 20% (or less) to determine if a deal is "great" or not, because with a large down payment almost anything looks like it's a deal. If you find a property that makes sense at 20% DP then you have options in the future to refi money out down the line, if you wanted.

Originally posted by @Mark Dolan :

Hi guys, I am new to the site and I am exploring the possibilities of investing in a rental property over the coming year. My biggest concern however is that I may struggle to get approved of a mortgage based on my low income reflected over the past few years. I am wondering if lenders allow you to pay a larger down payment to minimize the amount that you would need to borrow. I figure if people can buy houses with cash they perhaps they allow for something like this. Sorry if this is a silly question, I am still totally new to this and trying to figure out the basics. 

Thanks!!

The way you've described your post, you're implying a direct connection between qualifying for a loan and the size of the down payment. There's obviously more involved to qualify for a loan.  If, however, you want to help qualify yourself to a lender who's not quite convinced to approve your application, then "yes" you can put more money down. Then, you can do a cash-out refi later and reinvest it into another property.

Thanks for the replies guys. I guess the first thing I should do is speak to some potential lenders and see where I stand. I have heard the argument that paying more down up front lowers my leverage and there for is not advisable, especially since interest rates are at a low. Seems like there are definitely two sides to the debate.