Is anybody finding 20% down financing any more?

Question

Please note I am not asking to name names...just recent experience.

It used to be 20% down was common for investment property.  Is anyone finding 80% purchases these days?  Normal conventional.  Not at 12%....  Just wondering if I'm looking for a needle in a hay stack?

Harjeet Bhatti · Answer

15% down payment for 1 unit. 25%  down payment for 2-4 units.

Jimmy Dudley · Answer

The smaller local banks are where its at. Put on a suit, bring your paperwork and a smile and go for a drive. The small lenders in some areas tend to hold their loans in house so they are in it for the long run. Your may pay a half point higher, but you may be able to solve your down payment issue. I love local lenders.

Aaron Hall · Answer

I just spoke with a lender yesterday that offered 15% for a 1 unit.

Russell Brazil · Answer

If you use a lender with no overlays you can go as low as 15% down.

Joe Splitrock · Answer

The current guidelines for Freddie/Fannie backed conventional state your first investment property would only require 15% down payment for a single family but for 2-4 units it would be a 25% down payment. So, yes in your case the duplex would require 25% down. This is an underwriting requirement, so anyone offering conventional Freddie/Fannie backed loans will require the 25%.

Here is a link to a guide from Provident Bank Mortgage that explains the guidelines. The guidelines come from Freddie/Fannie, so would apply to any lender offering their products.

http://www.pbmwholesale.com/programs/A-1e%20Multip...

Roshard Jones · Answer

Just simply connect with potential lenders through e-mail. That is what I did starting out. Find out what the terms are and get as much information initially and you can weed out the ones you don't want to work with.

Roshard Jones · Answer

Yes, it was owner occupied but the point is there is a LOT of lenders out there and they're looking to make loans. You are the customer, not the other way around. Some of the lenders for investment properties will work with you all you need to do is explain your situation. You will probably get a lot of "No" but all you need to get is one yes If it's worth it to you and you've done your homework. If a deal is a deal you will find the money. There is no shortage of money out there.

Tony Salemi · Answer

Sorry.  Details are:

I have only 1 property with conventional which is in fact my PR.  Very good credit (740 middle).  Plenty of reserve (more than 24 months).  Low DTI (25%), property cash flows nicely (6.1 GRM) and 20% cap rate.

I'm starting to think there's a few things going on.  This will not be a local lender keeping the loan in house.  It is a 2 unit property.  Maybe I could spend a little more time searching out lenders as it seems they're out there, but my W-2 job soaks up 50+ hours per week right now.

To be clear, I have the 25%.  I just don't want to spend it.  As far as I'm concerned, I want as little of my cash in a REI as possible.

Thanks to everyone for your responses.

Joe Splitrock · Answer

Was this owner occupied? The rules for owner occupied are very different than they are for investment properties.

Joe Splitrock · Answer

@Tony Salemi we are missing details. How many properties do you currently have on conventional financing, including your own?

There are firm rules surrounding convention (Freddie or Fannie backed) mortgages. Where you will find differences is if the local bank is holding the mortgage or a non-conventional type of loan. The Freddie and Fannie guidelines are always changing. They tightened up after the financial crisis and have been loosening up since then. As you add more properties, the down payment and cash reserve requirements will change. So when you say it used to be common for 20% down, it could just be the number of properties you have. I had to do 25% on my last few properties.

Is anybody finding 20% down financing any more?

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