25% on multi-family units?
Hello again BP!
We have been saving and planning to purchase our first multifamily. I have been working with Well Fargo since the purchase of our second property and my loan officer and i have been planning on the down payment for the multifamily to be 15%. However, yesterday i put in an offer for two duplexes and contacted Well Fargo, only to find that we would have to pay a minimum of 25% for each property. When i asked why, i was told it was because its a multifamily.. Now I'm wondering why, and if anyone know of any options that will allow me to pay less than 25%.
I understand that i could pay less by using an FHA/203K, but we do not want to move into a multifamily as our first option. I also know that we can always just plan for a 25% down payment, and if that's the best answer to the question, i will gladly do so.
Thank you all very much for your input. My wife and i have learned more th
I know there is a 25% down payment requirement for investment properties esp at your bigger banks.
Did you buy your previous homes as primary or secondary residences and not investment?
Clayton Crawford It's overly general but you should plan on 25% down for all investment properties. You can talk to some local/regional banks and see if there's wiggle room, but consider it a pleasant surprise if there is. What you read a lot about here in BP is the owner-occupied 3.5% down multifamily house-hack. Since you're not living in either (or both) duplexes you're not eligible. I might be wrong but that's my understanding. And if you think this is all unexpected, wait until you try to buy a 5+ unit property and get the pleasure of terms on a commercial mortgage. Good times!
@Account Closed Thanks for your input, I'm very excited for the day that i will be negotiating on a commercial property! It will come soon. While i've got you, if you've already done so, and have some (do's and don'ts), i'm sure everyone on this thread will learn from them!
thanks.
@Clayton Crawford - happy to help...I think there maybe a disconnect with how the bank is viewing the purchase.
If you aren't going to live there then they will be financing it with an investment loan (IE higher interest rate, higher DP requirement). If you are going to live there they will finance it was a primary residence (lower interest rate, lower DP, which you did for the other properties.). I bought my first multi-fam as a primary residence and the DP requirement was not 20%. Hope that helps
@Account Closed thanks! believe me, it helps!