No more 10% down payments...

8 Replies

I know I'm late to the show here, but just found out that there is no more Homepath funding, so that means no more 10% down payments with no PMI.

How do y'all feel abou this?

Was really trying to stay away from PMI but I was speaking to a lender today he said something about 15% down but with PMI I had to cut the phone call short though. So to answer your question @Marquise yes at the momment I am.

If we're talking in the sense of "traditional," investing with traditional financing means then yes there is no more 10% down.

However combining creative with traditional investing can often times allow you to put down 0% and even end up with cash back, cash flow, and a property.

Here is an example:

Find a deal at 50-60% of ARV, tie it up, utilize equity in another asset as a collateral assignment temporarily, spend 2-5% of ARV to fix up or retenant the property, then receive up to 75% of ARV back (cash out refinance) thereby "netting," you cash back , allowing you to acquire a property, and provide you cash flow (depending on your market).

This would be a 0% down deal or negative down deal since you're getting cash back up to 75% of ARV.

Yes you need collateral but, not necessarily since a more experienced individual with collateral or high net worth person could assign collateral on your behalf (perhaps a mentor).

So by combining creative techniques, your own or assets of others, deal finding ability, and knowledge of the banking products and how to converse with bankers you could create and print money out of thin air (well you do have to invest your time of course).

Not so easy to accomplish. The property needs to be seasoned, 6 months or so and the bank will make you jump through hoops of fire to refi. They especially love hiring inexperienced appraisers -- low prices. 

Also, if you do happen to find a home for 50-60 % of ARV, the bank will question it.

Be especially mindful of debt to income ratios. Banks hate the ratio too tight. 

And if you do get an institution to finally complete the refi, it could be a 2 to 3 month painful process.

Be careful. 

Best alternative I know of is the old 80/10/10 is back. 80% 1st mortgage, 10% 2nd/heloc, and 10% down = NO mortgage insurance.

It's available in limited states for well qualified borrowers and is a great reward for those who kept their head above water after the recession. It's as simple as it gets without having to put 20% down.