20% Down, instead of 25% on First Investment Property?

Question

Hello BP Community:I am in contract on my first investment property -- a duplex. I understand that many lenders want 25% down on multi-families for first-time investors. Any suggestions on how to negotiate with lenders on a 20% down payment, instead of 25%?Thanks!

George Despotopoulos · Answer

@Michael Keane typically it's hard to negotiate as most lenders are quoting you based on a rate sheet, matrix, and their guidelines. It depends on who the lender is and what type of loan product / loan program you're getting into. You may not have success negotiating directly w/ the lender. It may be better to get competing quotes away. You'll be able to find 20% down on a duplex but the rate will be higher of course. If you go the non-bank route (like a hard money lender), you'll be able to get a 30 year fixed against a duplex at 20% down and the rate would likely be 4.5% - 5.125% depending on your credit score and the property's/loan's characteristics.

Tarik Turner · Answer

There are lenders who can go up to 80% LTV on purchases, however do not expect conventional rates

Nick Belsky · Answer

@Michael Keane

Find another lender.  20% is easy to find.  There are a some that will do 10-15% on promo.  Shop around, my friend.

Cheers!

Michael Keane · Answer

Thanks, Tarik.

Michael Keane · Answer

Thanks Jesse.

Jesse Rivera · Answer

If you are trying to go conventional, it's not a lender guideline, it's a Fannie Mae guideline, so unless you are going for a portfolio or non conforming loan, there is no negotiation. Lenders won't be able to sell the loan if the go lower than 25% down. If you are going to live in one of the units, that is a different story.

Andy Eakes · Answer

Are you hearing that from one particular lender or multiple ones? From my own experience, I have been able to get 20% down loans, but the terms are far more favorable with 25%. It's a huge difference too. I think with how crazy real estate has been these last few years lenders have decided to tighten it up a bit. I honestly would just talk with a couple lenders and get their take. At the end of the day, they're bidding to win your business, they will lay it all out for you.

20% Down, instead of 25% on First Investment Property?

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