What's up BP community? I've got a buddy trying to post a question on this forum, but he's having trouble getting his account set up for some reason. Being the good friend I am, I told him I'd post his question. So without further ado, here it is verbatim:

"I am new to real estate investing and my plan is to buy a duplex to live in one of the units and also rent my current house. I am preapproved for an fha loan with 3.5% down but many of the sellers in Kansas City do not want to sell to fha loan buyers. My bank does not have Conventional loans with low down payments of 3% or 5%. Does anyone know of any lenders that have a low downpayment Conventional loans of 3 to 5%? I will also take any creative ideas that you have to get a new investor started."

Thanks all! 

I’m also in the exact same situation. Except I don’t own a home already. I’m currently renting, by March 6th of 2018 (when my current lease ends) I’d like to purchase a fourplex with 15-20 grand to use. It will be my first investment in real estate. I was going to go around Portland tomorrow and talk to some banks to see if they, or any banks they know, can do a low interest conventional loan.

Good morning ShaneX2!

Shane Short, you're off to a great start! I'm an agent here in Portland and I bought my first couple rentals using FHA and VA low-down loans. It's a good strategy to get going. I'd save your time going to random banks (unless you have an "in" or referral.) send me a PM and I'll give you the names of lenders I've personnaly used who will help make your loan process a breeze!

Shane M., although I'm not in the Kansas area, maybe I can provide some general guidance? Good on your friend for continual movement and growth towards his goal! Other options exist for low-down loans, although FHA backed loans are the most common-he may just have to keep at it until he finds a buyer who doesn't mind the loan. It'll take longer, but is doable. If he's having trouble with an agent, let me know and I'll get him a couple recommendations. In the meantime, check USDA Rural loans, depending on where in the KC, MO area he's looking the properties may qualify. If that's not an option is he a veteran, first responder, or teacher? There are specialty programs for those professions. Cities sometimes partner with non-profits to provide grants to certain areas or people but those are going to require local knowledge. Have him PM or call me and I can make a couple recommendations for folks on the ground to help him out.

Best of luck to both of you! 

There are no 3-5% down conventional loans for a duplex, only an owner occupied single family home.  I think it's 15% down minimum on a duplex, but you can google it up......Fannie Mae loans.

Originally posted by @Wayne Brooks :

There are no 3-5% down conventional loans for a duplex, only an owner occupied single family home.  I think it's 15% down minimum on a duplex, but you can google it up......Fannie Mae loans.

FHA allows 3.5% down for a 1-4 unit provided it is owner-occupied.

Here are some lenders we've had luck with:

- Bank 21

- Cornerstone Bank

- Fidelity Bank

- Great American Bank

- TriCentury Bank

Good luck!

Originally posted by @Michael Cohen :

Originally posted by @Wayne Brooks:

There are no 3-5% down conventional loans for a duplex, only an owner occupied single family home.  I think it's 15% down minimum on a duplex, but you can google it up......Fannie Mae loans.

FHA allows 3.5% down for a 1-4 unit provided it is owner-occupied.

Michael, yes I and the OP know that.....he was asking about conventional loans. 

My apologies; I missed that!!

@Shane M Freddie Mac has a loan called Home Possible, which will allow 5% down on a 1-4 unit as owner occupied. I would look into that loan.

@Shane M the posts here have been helpful but I wanted to give a little more clarification so your friend knows what to look for and how to ask for it. 

Conforming, Conventional loans are governed by Fannie Mae and Freddie Mac (if you recognize those names).  The banks actually have no say on how these loans approve a borrower - Fannie/Freddie tell them what to do.  There is a loan type that has 5% down if you make below a certain income level or if the property is located in a specific "tract" of land.  Not every bank offers this loan and that's if you qualify for it.  You certainly might qualify for it so definitely ask about it.  15% down minimum is the normal requirement on a 2-4 unit that you occupy. 

However, there are other loan types out there.  I'll call these "portfolio" loans (sometimes called commercial).  Portfolio loans come from the bank's own portfolio of money (thus the name) so this is money that Fannie/Freddie does not control - the bank itself controls it.  So there could be a portfolio loan solution out there.  I say "could" because since each bank controls it's own money you would literally have to call each and every bank out there to find out their portfolio loans.  Most investors use small to mid-sized banks.  The bigger the bank the less likely they are to have a solution.  If it's a bank with one location and you've never heard of that bank...then that will be a good bank to call!  I do feel finding this type of a loan with this low of a down payment would be extremely difficult.  A mortgage broker might be a good person to know as well.  A broker represents many different banks.  Might save you a phone call or two.  Do not be surprised if you have to call 200 banks to find your loan.

Hope this helps!

@Shane Short We recently used Aaron Coker at RPM for our FHA loan. Great experience.

Thank you for all the responses. My buddy is off and running now

@Shane M I would first find a lender that has Freddie's Home Possible Program and see if you qualify.