Low Down Conventional Mortgage Lenders?

Question

Howdy y'all,

My wife and I are new to the area and we have a goal to buy our first investment property (multi-family) within the next few months. We are starting to look for lenders, and I'm wondering if anyone has any recommendations? I'm particularly interested in finding a lender that can do a low down (around 3%) conventional loan. I know I could do an FHA loan, but I'd like to do conventional if I can find the low down payment option. And yes, I do plan on house hacking and living in the property.

Do any of you have experience finding and using these types of loans?

Jacob Haskins · Answer

@Gabe Christiansen

Gabe, this is a great idea and I just completed a deal myself on my first investment in Bentonville.  I was able to get a first time home buyers loan with was 3% down CONV at a great rate! My purchase was a SFH that I rehabbed myself and plan to move out and rent when my 12 month anniversary rolls around.  My plan is to cash flow around $700 when I move out because I got such a good loan!

I think you might have a hard time finding a lender letting you put 3% down CONV on a multi family, however I know of some that will let you do a low down FHA loan which could be a great alternative.

My recommendation would be to try and find a SFH with a mother in law or converted barge, and secure it with a conventional loan.

Try calling Conrad at Iberia Bank Mortgage in Fayetteville, that’s who I used. Feel free to reach out, I would love to connect with another local investor.

Andrew Powers · Answer

Hello, there is a first time home buyer loan that I used, 3% down conventional but for single family only. Have you considered doing single family with a mother in law suite or accessory dwelling unit? Some ideas to look into. Good luck finding your property!

Gabe Christiansen · Answer

Thanks @Raymond J. Rodrigues and @Jacob Haskins for your insights. Yeah, I was confused about the differences between the Home Ready and Home Possible programs.  Unfortunately, I don't meet the qualifications for the Home Possible program and my goal is to keep a down payment below 5%, so we're planning on moving forward with an FHA.

Raymond J. Rodrigues · Answer

@Gabe Christiansen I’ll shine some light on this thread for you, as I am a licensed mortgage lender.

3% down payment for conventional loans only apply to single family, full review condos, not limited review, or town homes, for first time homebuyers.

5% down payment for conventional loans, up to a 4-plex is attainable through Freddie Macs Conventional loan program called Home Possible, if and only if you fall within the income restrictions. Meaning you can’t make more than what the program allows.

If you do exceed the income limitations, then you fall within regular conventional loan to value restrictions which are the following.

15% down payment for 2 unit primary residence

25% down payment for 3-4 unit primary residence

Your only other option for a low down payment with a confirming loan is 3.5% FHA.

I hope this helps.

Wayne Brooks · Answer

The 3% conventional is for a sfr only.

Gabe Christiansen · Answer

We really want to do a multifamily property because of the better returns. Yeah, I've thought about mother-in-law suites and adu's but haven't had much luck finding any in my area.

Low Down Conventional Mortgage Lenders?

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