Putting less than 20% down on non owner occupied

6 Replies

Does anyone know of a way of putting less than 20% down on a property(most likely MFH) in which I will not be an owner occupant? 

I know the obvious solution would be to be an owner occupant, but for this discussion let's assume that's out of the question. I have around 25k in savings I can put down, so while I may be able to find something under $125k, it severely limits me in my area. 

On a single family investment property with a direct Fannie lender you should be able to get in for 15% down assuming less than 4 financed properties. Multifamily is typically higher down payment.

@Andrew Jervis - There are so many ways to get into a property with less than 20% down. Have you heard of Vendor Take Back Financing?, Subject to, Private money (2nd mortgages and so on)? There are pros and cons to each, and there is a plethora of info in Bigger Pockets regarding these topics. Just search it on the Search bar and you will have lots to look into.

You are obviously looking to get into a investment property, in many cases some sellers would be happy to take your 25K cash and write you a note against the property.

25K is a sizeable sum. It can get you far. Good luck!

I would explore portfolio lenders in your area.  We're doing buy and holds and flips in the Des Moines, IA metro with a portfolio lender at 10% down.  They keep and service all their loans, so we can get into even pretty distressed properties without major headaches.  

You have to find the right (small/local) bank but they're out there. I just got a loan for a SFH rental in my LLCs name, 10% down, 20 year amort and fixed for five at 4%.

Great feedback here, @Ram Srinivasan made a good point in regard to the strategies he mentioned. You can always as a seller if they would consider subject-to or seller financing. However, the reason house-hacking a MFH has so much appeal is that as your first investment being in the building allows for you to keep an eye on it. Minimizes risk....

-James

Thanks everyone, this is all extremely useful. I have called up a portfolio lender/small bank and they said I shouldn't have any problem getting down to 15%, which is a step in the right direction and provides me a lot more flexibility. I'll have to do more research around BP especially for some of the strategies @Ram Srinivasan mentioned. I figured 20% wasn't a hard line and there are ways around it, but this is a huge time saver so thanks again.

For anyone reading, when I called the small bank on Friday they said that for a person with excellent credit the difference for a 30 yr loan in putting 20% vs 15% was only 4.625% vs 4.7%...so the spread does not seem bad at all. Definitely worth a call for anyone that might be in the same position as me