Are there any conventional loans available that require a down payment of 6%?

Question

I am encountering difficulty in finding a suitable mortgage for my rental investing career. Every bank I speak to insists on a minimum 20% down payment if I do not plan to reside in the property. You may wonder why I do not consider house hacking and obtaining an FHA loan to resolve this issue. However, I am currently attending a community college in California and have not yet decided on my 4-year college. Consequently, I will not be able to reside in the property for the required duration to qualify for an FHA loan. I will continue my search, but I would appreciate any suggestions you may have. Should I persist in finding a conventional loan that allows for a 6% down payment for long-distance investing, or should I explore owner financing?

Any feedback would be greatly appreciated!

Thank you, Tim.

Any feedback would be greatly appreciated!

Thank you, Tim.

Timothy Christian Jr · Answer

I hope all is well Darnell,

I appreciate the advice!! ill def. explore the seller financing option.

Dave Skow · Answer

@Timothy Christian Jr- thanks - the min down payment for a  DFR  rental proeprty is  15% of the  purchase price

Darnell Lockett · Answer

You're welcome. Keep us updated!

Darnell Lockett · Answer

Hi @Timothy Christian Jr. As others have stated, 6% DP isn't available for an investment property. Seller financing will be your best option if FHA or funds from family or friends isn't an option.

Timothy Christian Jr · Answer

Hey, Dennis

yea at this point a 6% conventional loan for an investment property is not gonna happen, so I'll definitely explore creative financing.

Thanks for the feedback!

Dennis Muno · Answer

Hello Timothy,

So for a conventional Fannie Mae 1 unit investment ppt I believe you'll need about 15% down. For 2+ unit I believe you'll need 25%. So with conventional, 6% down for an investment property will not work. Not possible.

If you want that low amount you may consider owner financing

Timothy Christian Jr · Answer

Dear Erik,It appears that seller financing may indeed be the most suitable option for me. I am grateful for your valuable feedback, and I will certainly explore other avenues of financing as well. Thank you

Timothy Christian Jr · Answer

Hey Nolan,I would like to express my gratitude for your feedback. I am indeed interested in acquiring funds from my family members, although I must admit that it is not my preferred method. I would rather explore other financing options, but I have not completely dismissed the idea. Nonetheless, I would greatly appreciate the opportunity to discuss any other potential avenues that I could pursue.Thank you once again for your input.

Erik Estrada · Answer

Hey Timothy,

6% down on a conventional investment property loan does not exist. You could however explore seller financing and buy a property with 10% down with the seller being in second position on a commercial mortgage

Nolan Chandler · Answer

Hey, @Timothy Christian Jr.  I know that it is possible to get a vacation home mortgage that can allow less than 20%, but it is case-by-case, and lender-by-lender.  However, if you are open to other types of financing such as private lending (family, friends, colleagues, etc.), that may be a way to allow for a lower down payment.

Would happy to discuss more if you ever wanted.

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