Investment property financing

6 Replies

Hello BP community! Total newbie here seeking some advice.

I have been told by my local financial institution that all of their loans for investment type properties require 25% down at this time. Does anyone have any recommendations for other institutions or other ways to finance a rental property. My situation is as follows.

60k annual income

25k available to put down

only debt is my car at $250 p/month

Excellent credit score 

Would like to see if there is any other conventional loan options that would allow a lower percentage down in order to maximize on what i have at the moment.

Am currently working with a local agent to find a duplex as a first investment property in the northern Madison, WI area.

I am completely new to real estate and have been doing tons of reading here on BP. I am still learning all the lingo and numbers but am finally in a good position to start investing. Look forward to hearing your ideas!

Your best option to get an investment property if you have minimal funds for a down payment would be to get an FHA loan. You can buy a duplex, triplex, or quad with only 3.5% down as long as you plan on living there.

Otherwise for a straight non owner occupied investment property I don't think you will be able to get in for less than a 25% down payment.

Of course if you have 25k that could be enough for a down payment on a duplex in the 50 to 70k range if you don't plan on living there. Make sure to have enough reserves.

@New Lor   welcome aboard. Keep on reading the post, blogs and utilizing the podcast. Plenty of info out there for you. As far as buying a duplex are you in position to house hack. Buy a duplex in a community that you would like to live in. Then purchase the duplex as a primary residence. This may get you around the investment property problem. 

Do you qualify for 1st time home buyer?  Don't know if that program is still available.  Also welcome to BP, to piggy back keep reading and posting and set up some of you keywords.

House hacking is a good method. I don't think you will find too many lenders that will loan for an investment property for less than 25% down. However, the advantage to this is that most lenders will, because of the high down payment, count the income that they expect the property to generate towards your income when qualifying the loan. I don't think they do this for the FHA o/o loans. I have also heard of some lenders requiring PMI on these FHA loans, which can eat up another big chunk of cash flow.

@New Lor conventional financing for a duplex investment property is 25% down for the first four mortgages. You can get a SFR for 15% down if it is mortgage 1-4.

@New Lor  Welcome to the site! Think about working with a local or small regional bank or credit union for this as well. They typically have more options available for you.

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