Seeking 5% Down Conv. 30yr Lender for Dover MF (no income limit)

Member since 2022 · 39 posts · 29 votes

I'm currently speaking to lenders for a Dover, NH 2-4 unit property and wondering if anyone has recommendations that stay on the bank/credit union's books. I can't qualify for a 5% down conventional loan through Freddie Mac/Fannie Mae due to income restrictions in the area. I'd ideally prefer a conventional option vs. FHA to make my offer more competitive. I realize I may need to go the FHA route but wondering if anyone has other recommendations. This would be an owner-occupied loan. Thanks in advance!

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Dave Skow

Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes

@Stephanie N.- thanks 1) will you be buying as a primary residence or as a rental ? 2) lender guidelines vary depending on #of units ...so you might clarify if at all possible

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Dennis Muno
Lender · Denton, TX · Member since 2023 · 349 posts · 80 votes
3y
Hello Stephanie,
Do you mean you are looking for loans that will not be resold to another lender after closing? Most mortgages get resold on the secondary mortgage market so lenders can get more money to be able to loan to others. When resold, your mortgage terms do not change at all
That being said, you can ask around banks/ local credit unions and see.
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Dave Skow
Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
3y
@Stephanie N.- thanks 1) will you be buying as a primary residence or as a rental ? 2) lender guidelines vary depending on #of units ...so you might clarify if at all possible
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Stephanie N.
OP
Member since 2022 · 39 posts · 29 votes
3y
I'm still searching so it will be 2-4 units but I haven't narrowed in yet. But it will be an owner occupy for a year before renting it out.
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Caroline Gerardo
Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
3y
Pretty much no bank/credit union keeps a 95% loan. You cannot qualify because your debt to income ratio is above 43%? There are not income restrictions for GSE standard loans. There are for Home Ready/Home Possible which is are special programs.
If you have 10% down there are lenders that may use different income approaches - bank statement loans/DSCR/
When you go to 3 and 4 units you need more down payment for FHA/conventional so stick to a duplex.
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Stephanie N.
OP
Member since 2022 · 39 posts · 29 votes
3y
I can't do the Home Ready/Home Possible programs because my income is higher than the average in the area. I'll look around for GSE standard loans, maybe that's a better fit. All the banks I've spoken to so far only offer Home Ready/Home Possible or FHA.

@Caroline Gerardo I didn't realize 3-4 unit required more money down. What is the typical requirement if I went that route?
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Patrick McCannPro Member
Realtor · NH · Member since 2022 · 112 posts · 59 votes
3y
3-4 units are very difficult to make work in the area with an FHA loan because of the FHA self sufficiency requirement where 75% of the rent income has to cover the mortgage payment which is challenging. Current below market leases that you have to honor on the properties, current interest rates, etc make it difficult to meet that self sufficiency. I am currently living in a duplex I purchased late December 2022 using an FHA loan. I've been following the Dover market closely if you have any questions! tomorrow 7/10 is the New Hampshire seacoast Real Estate Investor meet up at Chapel + Main in Dover. Have you checked with Holy Rosary Credit Union? I've heard of people having good success with them.
[email protected]603-818-9095
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Jaylan ArcherBusiness Member
Real Estate Agent · Portsmouth, NH · Member since 2014 · 150 posts · 65 votes
3y
You can definitely use an FHA loan with 3.5% down to buy a four unit, but that is a limit. Past 4 units you are getting into commercial property and just about everything with loans significantly changes.
I would stay with FHA though. I know it is going to make your offer less competitive but the multi-family market in Dover already is super competitive. There's currently 4 active multi-family properties in Dover in a town of 33,000+ people. I'd try the off market route. Drive for dollars, find long distant property owners and start sending letters.
I just had some clients find a terrific four unit that was off market and definitely cash flowed well. They were able to use an FHA mortgage and didn't have to compete with a line of open house attendees.
Archer and Associates of KW Coastal587 Reviews
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Patrick McCannPro Member
Realtor · NH · Member since 2022 · 112 posts · 59 votes
3y
Quote from @Jaylan Archer:

You can definitely use an FHA loan with 3.5% down to buy a four unit, but that is a limit. Past 4 units you are getting into commercial property and just about everything with loans significantly changes.
I would stay with FHA though. I know it is going to make your offer less competitive but the multi-family market in Dover already is super competitive. There's currently 4 active multi-family properties in Dover in a town of 33,000+ people. I'd try the off market route. Drive for dollars, find long distant property owners and start sending letters.
I just had some clients find a terrific four unit that was off market and definitely cash flowed well. They were able to use an FHA mortgage and didn't have to compete with a line of open house attendees.
Wow, sounds like your clients found an incredible deal! Congrats to them!
[email protected]603-818-9095
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Andrew BoscoBusiness Member
Rental Property Investor · NH · Member since 2023 · 440 posts · 416 votes
3y
Love Service Credit Union, triangle Credit Union and I have 3 stellar lenders in that area for FHA, 3%/5%and 10% conventional as well.
[email protected]603-833-0951
Andrew Bosco - Candor Investment Group529 Reviews
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Jaylan ArcherBusiness Member
Real Estate Agent · Portsmouth, NH · Member since 2014 · 150 posts · 65 votes
3y
I wish I could take some of the credit but I can't take any.
They put in the work and definitely found a great deal! I tell as many people as I can about different methods to find a great deal, but only a handful of people ever put in the work to ge one.
The first investment in my opinion is by far the most important. Setting yourself up for cashflow or a BRRR right out of the gate sets the trajectory to how quickly you can move to your second investment.
Archer and Associates of KW Coastal587 Reviews
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