Loan approved with 20% down, now they say 25%??

Question

Hi guys,

I'm working through a Fannie Mae loan on my first investment property and have had a weird situation come up today. The investment property is a duplex, and I'm just now being told that duplexes (and any 2+ unit investment property) require a 25% down payment, but all my numbers were run at 20%! My loan was written, approved, and has gotten through every single step and we are now just a few days away from closing when they drop this bomb on me. Everything I've read has indicated that 20% is standard...not 25%!

So what's going on here?

Wayne Brooks · Answer

If you are going to occupy one of the units-20%.  If not-25%.  Standard stuff.

Russell Brazil · Answer

Ive seen the same mistake happen to people over and over. Your lender might not do a ton of investor loans, so they didnt know off hand the 20 vs 25% requirement for an owner occupant vs investor down payment.  In an ideal world, your agent would be aware of this and your loan officer, so you would have known from the very beginning.

Joe Splitrock · Answer

@David Meister they will not budge on this. It was probably an oversight on the part of your lender and it was caught during underwriting. They are not responsible for their mistakes, so basically you need to come up with the 25% or walk away.

Bobbie Richards · Answer

I applied for a loan for a rental house and they said 20% down and then at closing told me I also had to have 6 months worth of payments in the bank. Luckily I had it but I thought it was a nasty little trick.

Bobbie Richards · Answer

I'm a new comer to this forum but I am learning a lot from you guys. Thanks for the comments.

Chris Mason · Answer

Interesting to note:

Of the several people told 20% down was available from this one lender and this one lender only as some special magical deal, that were told "Surprise!" last-minute that 25% down was standard and required, what do they have in common?

They all actually closed, even though the reason they picked that lender turned out to be a flagrant lie! I have a sneaking suspicion that each and every time, the borrower was told of the greater DP requirement after all contingencies were lifted.

So the shadiness "worked," from the lenders' perspective, because it brought business in the door that closed. That's kind of unfortunate, to be honest. It rewards bad behavior. It's worse than the old trick of quoting the rate 0.25% below market at the preapproval stage because an extra 5% down has a significantly greater impact on people's financial planning than 0.25% to rate.

Jeffery McBride · Answer

I talked to my lender today about a triplex I'm looking at and she told me that I would need at least 25% down.

Good luck with your duplex.

Shaun Weekes · Answer

Unfortunately 25% is standard and they just messed up.  If they would have run DU at the start of the process it would have have been caught but they obviously didn't.

Good luck with everything Sir.

David Meister · Answer

Thanks so much for all the feedback. You all are really quick!

Loan approved with 20% down, now they say 25%??

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