Conventional Loan Help- Primary Residence

[Jason Maguire]

Hi BP Team,

I've been looking to move out of my current house (SFH) and am looking to buy a 4 unit that I intend to live in for the next few years. My plan was to utilize a primary residence conventional loan & put between 5%-10% down in total.

I have been trying to get pre-qualified over the past week & have been running into some issues i was hoping for any expert or loan officer can shed some light on the below:

Long story short, when trying to get pre-qualified, my local credit union pretty much said that I would have to put 20% down & would not be able to put 5 % down on another primary residence. To sum it up in quotations this is what the loan officer said, " We would have to establish your motivation to move out of a current house as your primary, & into a bigger house. The reason is people will say they are going to live in it for better rates and terms and then never move in & make it an investment property, so we are required to document why you are moving. Even as a primary residence, the minimum down payment would still be 20%"

So that being said above... is this guy full of crap? I get the bank wanting to do their due diligence to ensure you are going to live there, but him saying at the end that 20% down is still required seems like total BS as i know you do not need 20% down for a primary residence. When asking him if this was Freddie Mae/ Fannie Mac guidelines, he said "yes" which didn't seem accurate.

I was also under the impression that a lot of these loans are based on "intent"- meaning, if i am under contract & something happens to not allow me to live there anymore (breakup, moving, new job, can't afford, etc), then i wouldn't be penalized. That is not the case here, I just thought it was weird that he's saying it's 20% down for any primary residence.

Looking for any thoughts on this & if anyone knows of a good lender based out of NY, let me know!!

Thank you!

Jason

[Jay Hurst]

Quote from @Jason Maguire:

Hi BP Team,

I've been looking to move out of my current house (SFH) and am looking to buy a 4 unit that I intend to live in for the next few years. My plan was to utilize a primary residence conventional loan & put between 5%-10% down in total.

I have been trying to get pre-qualified over the past week & have been running into some issues i was hoping for any expert or loan officer can shed some light on the below:

Long story short, when trying to get pre-qualified, my local credit union pretty much said that I would have to put 20% down & would not be able to put 5 % down on another primary residence. To sum it up in quotations this is what the loan officer said, " We would have to establish your motivation to move out of a current house as your primary, & into a bigger house. The reason is people will say they are going to live in it for better rates and terms and then never move in & make it an investment property, so we are required to document why you are moving. Even as a primary residence, the minimum down payment would still be 20%"

So that being said above... is this guy full of crap? I get the bank wanting to do their due diligence to ensure you are going to live there, but him saying at the end that 20% down is still required seems like total BS as i know you do not need 20% down for a primary residence. When asking him if this was Freddie Mae/ Fannie Mac guidelines, he said "yes" which didn't seem accurate.

I was also under the impression that a lot of these loans are based on "intent"- meaning, if i am under contract & something happens to not allow me to live there anymore (breakup, moving, new job, can't afford, etc), then i wouldn't be penalized. That is not the case here, I just thought it was weird that he's saying it's 20% down for any primary residence.

Looking for any thoughts on this & if anyone knows of a good lender based out of NY, let me know!!

Thank you!

Jason

 @Jason Maguire   He is not full of crap, 20% down in the best CONVENTIONAL option. Here is Freddie's matrix directly from them:  https://sf.freddiemac.com/gene...    Fannie actually requires 25% down. 

If your income is lower then the 80% median income for your area as determined by this map you CAN do as little as 5% down, but the qualifying income has to be low enough: https://sf.freddiemac.com/work...

There are non-conventional options that will allow for a 15% down 3-4 unit owner occupied property but they will have higher rates then the conventional options above. 

and of course FHA can technically be done with as little as 3.5% but that is very tough due to FHA self sufficiency requirement on 3-4 unit. FHA test info