How low can you go on conventional mortgage down payments?

Question

Hello. I recently paid off my home. I've been contemplating buying a new property that I could rent out. I have no plans of living there at any part of the process which, if I understand correctly, would disqualify me from an FHA loan and have to use a conventional mortgage loan which I've never done.

My question is, are conventional mortgages a set 20% down or is one able to get low down payments the same as an FHA loan to keep more cash on hand?  I'm a complete noob and I'm sure this is basic knowledge, so I appreciate the help. Thank you in advance.

Richi Brown · Answer

@Mike Lindsey

Typically speaking getting a conventional loan youre going to be looking at that 20% down. Im sure you can find lenders to go a little lower than that but youre going to have to do alot of leg work calling around and finding them. FHA loans are awesome because of the lower down payment you put forth, but those arent your only two options. Committing a good month of listening to the BP Podcasts, you will hear many different stories and strategies for financing. But Brandon Turners book “Investing in Real Estate With Low and No Money Down”, is a good book covering the art of creative financing, and its all in one location if you dont want to scroll through the hundreds of episodes!

Mike Lindsey · Answer

Sweet, thanks for the heads up. I'll check it out.

Dimitri Paspalaris · Answer

Just applied for a new loan on my first deal. Lenders are being real tight. In my area they are asking for a minimum of 20% down but the rates aren't great unless you start paying 25%.

Mike Lindsey · Answer

Hmmm. That's disappointing. I mean, I can pay the 20%, but I'd much rather pay lower. If things work out I'd love to try to do another property in a year or so, maybe find one at a discount I could have fixed up with the saved cash. Thank you for sharing.