Looking for 20% down multi family loan - does that still exist?

Dallas, Texas
General Real Estate Investing
4yFollow

Looking for 20% down multi family loan - does that still exist?

Karen Kikalo
Member since 2021 · 5 posts · 8 votes

Hello fellow BPers,

I have two multi family new builds under contract in Texas and Florida.  I didn't plan on buying two properties at the same time but the building schedules due to supply chain and permit issues (so I'm told) have put both project MANY months behind. Lenders I've spoken to said their minimum down payment for a multi family property is 25% but I'm hoping to find 20% down.  Does that exist?

Thanks so much!

4Reply
98 views

Most Popular Reply

Scott WolfPro Member
Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 958 votes
4y
Quote from @Isaiah Gabaldon:

@Karen Kikalo tell them your going to live in them. You could possibly put down as little as 3 to 5%. Doesn't hurt to ask


 That's mortgage fraud if you don't actually intend to live in them.

5Reply
See this reply in the discussion

30 Replies

Jump to latestLatest
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    4y

    Not from Fannie or Freddie 2-4 unit non-owner occupied it doesn't, no.

    If you want to open up 20% down, you have to "dial for dollars" and say the following: 

    "Hello! I don't want or expect a good rate or low fees relative to market, that's not important to me, and I'm neither going to hold it against you, nor insinuate that a conspiracy is afoot to fleece me, when I don't get those things. What I DO want is a non-qm loan, probably of the DSCR variety, at 80% LTV, on a 2-4 unit rental property. Do you have that?"

    4Reply
  • Blake A. Rivers
    Lender · Member since 2020 · 34 posts · 13 votes
    4y

    There are some Private money lenders that would do a 80% LTV on a 2-4 unit property but if the multifamily property is above 4 units there is not really an option out there that I know of. Are you looking to hold long term or do a BRRRR style investment?

    1Reply
  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 958 votes
    4y

    @Karen Kikalo, speak with a mortgage broker.  Are they 2-4 units or larger?

    1Reply
  • Givo Aghasi
    Lender · Los Angeles, CA · Member since 2022 · 238 posts · 73 votes
    4y

    Hi @Karen Kikalo some lenders allow you to go up to 90% CLTV meaning you can purchase a multifamily with only 10% down payment. My suggestion would be not to prioritize cost but to prioritize a good relationship with a mortgage broker that can help you navigate the commercial lending world.

    1Reply
  • Shane Moynihan
    Realtor · Keene, NH · Member since 2018 · 38 posts · 14 votes
    4y

    Hi @Karen Kikalo if I were you I would try to reach out to smaller local banks and see what they offer. I had a similar problem, and found new types of loans that the more traditional banks were not offering. My situation is also applying to my next multifamily purchase to be an owner occupy, but it is worth a shot either way!

    1Reply
  • Karen Kikalo
    OP
    Member since 2021 · 5 posts · 8 votes
    4y

    Thanks for everyone's suggestions.  Just to answer a few questions - the properties are a duplex and a triplex.  They are new build so I'm planning to buy and hold.  I was looking for a possible 20% down option so that I wouldn't have to come up with as much money as 25% (plus high points which I've never had to deal with before) on two properties at the same time - Definitely not the plan!  Are commercial lenders competitive with Fannie/Freddie lenders?  I'm not sure if it matters but these properties are numbers 6 and 7 (including my personal home loan). 

    Thank you for the guidance and if you have a great mortgage broker or lender that would be a good fit for this scenario, I'd love their contact info.  

    Thanks again!

    3Reply
  • Chris Webb
    Investor · Central Virginia · Member since 2020 · 394 posts · 253 votes
    4y

    Hi @Karen Kikalo, I know the YouTube channel "one rental at a time" has a lender who will do a 20% down on 5+ units. I think it is Steven Dou. If you google them you can get his contact information. 

    3Reply
  • Erik Browning
    Lender · CO CA TX WA ID OR · Member since 2020 · 419 posts · 542 votes
    4y

    Hi folks, who are you using on the wholesale channel to get a 20% down loan on multi investment <5 units? I'd love to establish a connection

    1Reply
  • Alex BekezaBusiness Member
    Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    4y

    80% Still definitely available on 2-4s for commercial DSCR loan if it will debt cover at the new higher rates! DSCR rates are right there with Fannie/Freddie at the moment somehow. Something to consider.

    [email protected]818-606-8823
    Investor Property Loan5306 Reviews
    WebsiteView Page
    1Reply
  • Kevin Woodard
    Lender · Nationwide · Member since 2021 · 220 posts · 105 votes
    4y

    They sure do exist! 

    1Reply
  • Ryan O'Mara
    Financial Advisor · Des Moines, IA · Member since 2017 · 173 posts · 58 votes
    4y

    @Karen Kikalo - I work with DSCR lenders that would go up to 80%LTV on a purchase if you're FICO is high and the dscr works.

    So there are options.

    1Reply
  • Luka Milicevic
    Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes
    4y

    @Karen Kikalo 20 down is very normal. You will just have to call several lenders. 

    If you can....get some owner financing, or have the owner carry back the downpayment!

    1Reply
  • Greg Huegel
    Lender · Greenville, SC · Member since 2022 · 37 posts · 10 votes
    4y

    @Karen Kikalo, As many other BP members are mentioning, you can obtain 80% LTV for 1- to 4-unit properties through DSCR loans. As long as you qualify based on your credit score, property value, and debt coverage requirements, a 20% down payment is definitely feasible. Taking into account current interest rates, you may have to buy the rate down for debt coverage purposes to qualify at the lender's minimum requirement to achieve the max LTV of 80%. This truly just comes down to the lender specific requirements to know if it is truly an option. Typical minimum DSCR requirements for lenders is 1.20x.

    Hope this helps!

    2Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    4y

    @Karen Kikalo I don't know of any lenders that can do 20% down on conventional loans but there are some commercial lenders that can do it. 

    1Reply
  • Giancarlo Orozco
    Wholesaler · USA · Member since 2019 · 42 posts · 32 votes
    4y

    DSCR loans are the way to go hands down and the loan depends solely on the performing assets and not based on debt to income ratios, work history, income, etc. They usually require 20% down. This is the go to loan for commercial and multifamily imo.

    2Reply
  • Jorge Delgado
    Member since 2022 · 3 posts · 2 votes
    4y
    Quote from @Giancarlo Orozco:

    DSCR loans are the way to go hands down and the loan depends solely on the performing assets and not based on debt to income ratios, work history, income, etc. They usually require 20% down. This is the go to loan for commercial and multifamily imo.

    I’ve never heard of this until now. I’ve looked into what it is and does sound really good I only have one income property that I got as conventional loan. What are some companies that are legit that do these loan. Or what is something that I look for though to make sure they legit. You can never be to careful now A days. 
    1Reply
  • Isaiah Gabaldon
    Contractor · San Diego, CA · Member since 2022 · 16 posts · 7 votes
    4y

    @Karen Kikalo tell them your going to live in them. You could possibly put down as little as 3 to 5%. Doesn't hurt to ask

    1Reply
  • Briyana Hawkins
    New to Real Estate · Annapolis, MD · Member since 2019 · 84 posts · 23 votes
    4y
    Quote from @Luka Milicevic:

    @Karen Kikalo 20 down is very normal. You will just have to call several lenders. 

    If you can....get some owner financing, or have the owner carry back the downpayment!


    Hi Luka, I hope this is not a dumb question but its something I always wondered! So with owner financing, investors can effectively take ownership ie collect the rent, even though they do not fully own the property? 

    1Reply
  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 958 votes
    4y
    Quote from @Isaiah Gabaldon:

    @Karen Kikalo tell them your going to live in them. You could possibly put down as little as 3 to 5%. Doesn't hurt to ask


     That's mortgage fraud if you don't actually intend to live in them.

    5Reply
  • Stephen Zygiel
    Real Estate Agent · Tulsa, OK · Member since 2018 · 8 posts · 4 votes
    4y
    Quote from @Karen Kikalo:

    Hello fellow BPers,

    I have two multi family new builds under contract in Texas and Florida.  I didn't plan on buying two properties at the same time but the building schedules due to supply chain and permit issues (so I'm told) have put both project MANY months behind. Lenders I've spoken to said their minimum down payment for a multi family property is 25% but I'm hoping to find 20% down.  Does that exist?

    Thanks so much!


     Karen, I know a good mortgage broker who may be able to help. I'll send you a PM with his info.

    1Reply
  • Jennifer Jo McCallonBusiness Member
    Member since 2020 · 62 posts · 59 votes
    4y

    I was told by a lender in Pennsylvania that I could do 20% down, same in California. These are the two states where I own property. Ask around and call local lenders. 

    [email protected]510-545-6390
    1Reply
  • John Morelli
    Lender · Deerfield, IL · Member since 2020 · 44 posts · 31 votes
    4y
    Quote from @Karen Kikalo:

    Hello fellow BPers,

    I have two multi family new builds under contract in Texas and Florida.  I didn't plan on buying two properties at the same time but the building schedules due to supply chain and permit issues (so I'm told) have put both project MANY months behind. Lenders I've spoken to said their minimum down payment for a multi family property is 25% but I'm hoping to find 20% down.  Does that exist?

    Thanks so much!


    The parameters you're seeking are definitely available. We are actively placing 1-4 unit deals in DSCR loans at 80% LTV with 10 year interest-only option and 30 year fixed rates. 680+ FICO, $70k minimum loan size, and DSCR requirement of 1.0x or higher.

    1Reply
  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    4y
    Quote from @Briyana Hawkins:
    Quote from @Luka Milicevic:

    @Karen Kikalo 20 down is very normal. You will just have to call several lenders. 

    If you can....get some owner financing, or have the owner carry back the downpayment!


    Hi Luka, I hope this is not a dumb question but its something I always wondered! So with owner financing, investors can effectively take ownership ie collect the rent, even though they do not fully own the property? 

    You do fully own the property in a legal sense. Owner just has a note/debt pure monetary charge, no legal ownership at all.
    1Reply
  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    4y

    I think you got good answers in another thread, but definitely lenders are pulling back in general due to interest rate and economic risk. Be prepared to pay high points and high interest rate for 20% down...

    1Reply
  • Issac San Miguel
    Lender · Austin Texas · Member since 2022 · 319 posts · 156 votes
    4y

    Yes, 80% LTV is available.

    Options include 5/1 ARM, 7/1 ARM, and 30 Yr.

    10 Yr I/O periods available.


    Different PPPs affect rate.

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free