Between a Rock and a Hard Place: How Do I Make This Work?

Question

Hey everyone!

I just posted a few days ago about my situation, but this time I will simply:

In short- I am currently under contract for buying a property zoned as a duplex/multi family. I did not find out until a few days ago that it was zoned as such (was under contract for 10 days already, with my escrow deposit a week in). I should mention my dad is a co-signer and will be helping me with the down payment.

The property has a 3/1 house with a detached garage with renovated income apartment on top, which I plan to rent out.

Now, we have hit a huge snag. I have been told that my original plan (conventional loan with 5% down) can no longer happen because of the zoning. The minimum for multi family/duplex is 15% down, which may not be feasible.

I would just switch it to FHA, but I have been told the co-signer on a multi family FHA MUST be an occupant. Is this actually true?? Is there a way around this AT ALL with FHA??

What can be done here? I’m trying to keep the process moving and really want to see this through.

Thank you!

Todd Snyder · Answer

If you don't need your co-signers credit score for the loan and just need help with the down payment, you could accept a gift of the amount needed for the down payment and just write a letter explaining the gift to your bank!

Alex Deacon · Answer

@Clint McAllister if you are planning on an FHA loan then it will need to be owner occupied. I do believe there are certain lenders who may consider 10% down conventional financing. I have a few here in the Pittsburgh market but the property would need to be local. You will have to dig deep and try to locate one. Right now lenders seem to be tightening up a bit till we get thorough this.