3% Conventional Loan

2 Replies

Just received a couple pre approval letters for a 3% down conventional loan. My credit is great and this would be my first home. I'm assuming that's why the down payment is so low. I'm wondering what the restrictions are on a loan like this for owner occupancy. How long before I can move out and rent the place. I know FHA is a year seasoning period so I'm wondering what the restrictions are on a conventional loan. Similar?

Also, what would differ if I went into a loan like this with the intent of using it as an investment property? Would I need a larger down payment?

Thanks in advance!

@Sebi Ardelean congrats on the pre-approval and building a strong financial position!

Most documents (that I have or have looked at in Ohio and Texas) state that the owner but "intend" to live in the property. You can purchase a home and then your company relocates you another city. The bank will not require you to sell it or penalize you. 

There is no set time for most loans, although the common advice is after a year you're in the clear. 

If you tell your lender you want it as an investment, you're going to put 20-30% down with a higher interest rate.

Hope that helps. 

Best of luck!

@Sebi Ardelean thanks for posting. You should 100% be relying on your lender here. While both Fannie Mae and Freddie Mac both have 3% down options with requirements on them what we cannot tell is what your lender "Overlays" are. Meaning, your lender could have rules OVER the Fannie/Freddie rules. We call those extra rules OVERLAYS. Your loan will likely have verbiage that will require you to move in withing 60 days and to occupy the property for 12 months...but it might require other things too. If you are prequalified with a lender then please ask them directly.

And yes, an investment property Fannie/Freddie loan would require 15% down minimum for a Single Family Home.