5% Down Conventional for Owner-Occupied Duplex in Denver?

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5% Down Conventional for Owner-Occupied Duplex in Denver?

Jared Bandel
Denver, CO · Member since 2015 · 20 posts · 9 votes

Hello everyone,

I am currently hoping to buy a duplex or triplex in the Denver area within the next 6 months. I was working with a lender who has pre-approved me and told me that I could get a loan on a multifamily for 5% down. I would like to avoid FHA if possible because I will have more than 3.5% to put down, but the lender I was working with told me I'd need at least 15% to get a conventional through her company.

Does anyone know if it's possible to get a 5% down loan on a multifamily for an owner-occupant? I've heard yes and no from various sources. If so, do you have any recommendations for lenders?

Thanks in advance!

Jared

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Greg Pond
Real Estate Broker · Denver, CO · Member since 2016 · 36 posts · 14 votes
10y
Originally posted by @Jean-francois Ndomb:

Great tip @Jared Bandel, I will be contacting my lender soon. But i am currently buying a 4 unit and looking to occupy one of them and qualifying for an FHA loan. He told me that he can definitely make it happen. But I will inquire about the multi family and see if i can get that instead. That would be great. Thanks for sharing guys, great tips and techniques, that i will be looking to explore. Good luck Jared. @Greg Pond do you put all your cash flow back onto your mortgages until they get to 20% typically and refinance?

 This is my second investment property so keep in mind I'm a newbie as well. I do not put all of the cash flow back into the property. I am a big fan of having cash reserves of about $10-$15k for unforeseen expenses and for future upgrades. Once the bank account for that specific property reaches $10-$15k I will then start to put the cash to work by paying down the mortgage. And, yes we will be refinancing to buy another one.

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  • Seth WilcockBusiness Member
    Lender · Nashville, IN · Member since 2016 · 139 posts · 84 votes
    7y

    Clint - It's definitely too bad about the recent income reduction under the FreddieMac HomePossible loan. It really was a fantastic alternative to FHA. I concur with @Chris's reply above.

    That being said, you may be interested in my latest blog post: How To Buy Multi-Family In Denver-Metro Without A Down Payment

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  • Chris LopezPro Member
    Real Estate Agent · Denver, CO · Member since 2015 · 1k+ posts · 858 votes
    7y

    @Seth Wilcock interesting details on the metroDPA program. I like the no down payment, but I have a hard time with the 3 year rule for living there. EVerytime I run models, I see more power in acquiring properties every year vs sitting in one place. I'll have to dig into this. thanks

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  • Seth WilcockBusiness Member
    Lender · Nashville, IN · Member since 2016 · 139 posts · 84 votes
    7y

    Hi Chris - there are a couple things to keep in mind with this strategy. I think the power behind metrodpa is the fact that you can purchase multi-family with down payment assistance. You could acquire 3 single family homes in 3 years, but if you bought a quad using metrodpa, you would have acquired four doors within a three-year period. Also, you would only need to occupy the property for one year to make it count as a primary residence. If you moved out after only one year, only one-third of the down payment assistance loan would be forgiven. That being said, if you were okay paying two-thirds of the down payment assistance loan back (which would have otherwise been your down payment on the home had you not used down payment assistance) you truly would only need to truly occupy the property as a primary residence for 1 year. The 3-year timeline only applies if you want your entire down payment assistance loan forgiven.

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  • Chris LopezPro Member
    Real Estate Agent · Denver, CO · Member since 2015 · 1k+ posts · 858 votes
    7y

    @Seth Wilcock thank you. that makes sense! Your ears must have been burning because I just posted a few questions on your blog post. 

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