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

7 Replies

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! 

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.  

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.

Originally posted by @Jesse Rivera :

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.

 Thanks Jesse. 

@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.