25% Down on a 4-unit Rental Property??

[Robert Guilfoyle]

I am putting in an offer for a 4-unit rental property.  I just spoke with my mortgage guy and he is indicating I need to put down 25% since it is a rental property?  I thought I could do a 20% down payment?

Thoughts?

[Chris Mason]

Conventional down payments, lower of Fannie or Freddie in each case (need to be working with a lender offering both Fannie and Freddie or this might not apply):

• 15% down - investment property SFR (horrible rate w/ PMI), or owner occupied duplex.
• 20% down - owner occupied 3-4 unit.
• 25% down - investment property MFR.

In all cases, 25% down is necessary for a rate that wont make you howl. Gotta figure out if you prefer cashflow or CoC ROI.

Once you own more than 4, and then 6, financed properties, those requirements increase depending on the scenario.

@Robert Guilfoyle, if you do enough dialing for dollars you might find lower down payment requirements, but it will not be government subsidized money. Higher rate, ARM, and/or multiple points up front -- typically at least 2 out of 3, assuming you can find it at all in your state.