I currently own one multifamily in New Jersey which is also my primary residence. I am looking to purchase a second multifamily property. My question is, what percentage down payment is the minimum I am able to put down for different loans? Are there any loans that let you put down 10% for example instead of 20% ? Would me making this my new primary residence make a difference? All advice welcome.
Hi Joseph, I'm a real estate agent and investor in Northern NJ.
Can you provide more details on your current property? Usually thats where I can determine what your options are.
What mortgage did you acquire your home with? (FHA, Conv..)
How long ago?
Home Value and rental income?
I purchased my home in 2019, its a 3 family with an income of $3650 (one unit I live in, and I rent out two so if I move out the cash flow will go up significantly). Its current value is $485,000 or maybe a little more. I am the sole owner and I have a conventional loan. I am located in Union County, NJ. The next property would also be in Union County, NJ.
What did you buy the home for and what's the mortgage now?
If you went conventional, I would suggest going FHA for the next deal.
3.5% down and it's been over 1 yr so you'll qualify easily (income and DTI aside).
I work in Union County btw.. let me know if you need help with anything there.
Hi. Sounds like you're in great shape! Here's my 2 cents. Set up a heloc on your current property - go as high as you can with LTV. Set up your next purchase as owner occupied. You'll have the heloc for cash later if needed, get a higher LTV on your new deal, with better rate too. Hope that helps. Harry
You have two options for your next purchase on a multi.
If you go conventional, the down-payment will be 15% for a 2-unit and 25% for a 3-unit. If you go FHA, the down-payment would be 3.5%. You would have to occupy the property for 1 year and then can move out.
@Joseph Matarazzo Hi Joseph. If you plan to owner occupy the next property it'll be 15% for a 2 family and 25% for a three or four-family. this is all for conventional Fannie and Freddie type loans. The market is hot for multis right now. Many that I have seen don't make a ton of sense at the prices they are going for.
If you plan to move into the new place and make it your primary you can get away with the percentages above but if you strictly want to use it as an investment you're looking at 20-25% down for 2-4 family properties. Hope this helps.
I thought you can't use fha after your first deal?
You can only have one active FHA loan at a time, unless if you relocate over 100 miles or meet other specific criteria.
Aside from that, you can get an FHA loan at basically any time as long as it's your only one.