15% down portfolio program? 6.75% interest

45 Replies

I found a 3 unit multi family today. I have pre-approval for 15% down on a portfolio program non owner occupied. Interest rate is 6.75% how insane is that? My FICO score is 799 am I getting boned? I’ve never heard of 15% down usually 20-25 minimum.

@Roger Evans Welcome to BP and congrats on finding the deal!

15% down is a real thing, and yes, you often pay a higher interest rate for it. You can ask them what rate they'd charge if you put down 20-25%.

But first, are you dealing with a legit lender? You could be getting scammed, but neither the 15% nor the 6.75% rate are inherently red-flaggy.

First, on a multi, you are lucky to have even found someone that will loan at 85% ltv. With the rarity of that, yes Id expect to pay a very high interest rate. At 25% down conventional youd probably be at 5%.

Originally posted by @Doran Summers :

@Dylan Mejo depends on credit score over 640 and value is over $100,000 you should be getting 80% ltv.

Never been able to get 20% down as per Fannie/Freddie guidelines. Nor any local portfolio lender in my area. Owner occupied buildings...sure 

 

@Dylan Mejo you may have to look outside your area for lenders. Just a thought. Less guidelines and easier to close. I think rates for QM lenders are a little higher. These are programs which is t hard money but softer guidelines that banks.

@Roger Evans I think you have great terms at 15% down. You mentioned about wanting to sell in 3 to 5 years. So I would go with the lender you have unless you think it’s better terms for 15% down. Then refinance would still come with fees so keep that in mind. Plus you might not have enough equity in the property to refi after a year or two. Then you have prepayment penalties which is probably 3 to 5 years.


check to make sure you get term sheets first and review. Does the home need to be already rented for the bank?

@Roger Evans everything I’ve bought so far has been a commercial real estate note, 6%-7% on a 20 year note, at 85% loan/15% down. I’ve been lucky enough for lenders to pay part of the 85% toward acquisition, and I pay closing costs. Repairs are my responsibility up to that 15%, then the loan kicks in for the remainder. I’ve done this 3 times now, and it’s let me do almost 0% down since I can do repairs at my own pace and use OPM for repairs, as long as I provide receipts.

In my market, change in rate between, say, 5-8% are so negligible in mortgage payment that I gladly concede that to get the 0% down terms that I like.

It’s a give and take game. Find a bank that lets you play to win.

Tim

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