All Forum Posts by: Jerry Padilla

What You Need To Know On Getting In The Game, Financing & Investing With Little Money Down.

This is written for Conventional Financing. Conventional financing is where you are going to see your lowest interest rates, and also requires the property to be in your personal name.

Required Documents:

• Credit report will be pulled
• Tax returns for 2 years,
• Bank Statements and Assets - dating back to the past 60 days,
• W2's, pay stubs, and / or proof of income,
• Photo ID - Driver's License
• Gift Fund Letter - Allowed FOR PRIMARY Residence Only

Required Down Payments:

Single Family Residence - 15% - 20% down

Multi-Family Residence - 25% down

Click Here For More Info On Conventional Financing, after reading through these options.

***** Money in your account for these down payments must be seasoned for a minimum of 60 days, prior to applying for a loan. If the down payment and reserve requirements are not seasoned for 60 days they must be sourced....... Acceptable sources are cash taken out on the equity of your primary residence, checking accounts, savings accounts, stocks bonds, IRA's, retirement funds like a 401k, trusts, and cash value life insurance policies.

Getting in the game with Little Down.......

The ideal situation is saving cash up for the down payment as you aren't taking on more debt with this scenerio. Your debt to income ratio will be calculated and any debt taken on will have an effect on this ratio.

Do you currently own a primary residence?

If Yes, Can you pull equity out on this property, to use for a down payment on an investment property?

If No, Consider purchasing a Multi-Family Primary residence with a low down payment option which is available with FHA Financing. FHA Financing requires 3.5% down, allows for up to 6% sellers concessions (seller contributions towards your closing costs), and allows you to purchase up to 4 units as long as you will be living in one of the units. Interested in FHA Financing? Click Here For More Info On FHA Financing.

Home Possible is another option and you can go as low as 5% down in the area's without income limitations. Home Possible has much lower mortgage insurance with great credit compared to FHA. Interested in Home Possible? Click Here For More Info On Home Possible Financing.

These scenerio's still not working or in your ideal world?

Your last option for coming up with the down payment ......... Is to pull out money from another source and allow the money to season for a FULL 60 days, prior to even applying. Sources that would be questioned and denied prior to 60 days are: personal loans, credit cards, or any unsecured debt.

I would strongly recommend after this initial purchase to use the BRRR method - which if done ideally will allow you to keep pulling out equity on your previous Click Here For More Info On BRRR Method.

Investor Friendly Lender Offering a Wide Range of Products from Beginners that are "House Hacking" to the experienced investor. We have both conventional and portfolio products for residential property.

Interested in Conventional Financing?

Conventional Investment Property Financing

Interested in starting out with "House Hacking" Here are some blogs, on comparing the difference in Home Possible, & Home Ready, as well as info on FHA Financing.

House Hacking: Home Ready vs Home Possible

House Hacking with FHA Financing

Interested in using the "BRRR method" and coming out with as little out of pocket expenses? Here is some info on Cash Out Financing & Delayed Financing.

BRRR; Cash Out Financing & Delayed Financing

BRRR - What You Need To Know When Using The BRRR Method Podcast

Interested in Rate & Term Refinancing One or Multiple Properties at a time? Here is some info on Rate & Term Refinancing

Rate & Term Refinancing Properties 1-10

Interested in Renovation Loans? These are just for the beginning investor that owns less than 4 financed properties including subject. This is NOT for fix and flip properties that you intend to sell. Here are several loan products for renovating properties.

FHA 203k vs HomeStyle vs EZ - C Renovation Loans

Interested in VA Financing?

House Hacking with a VA Mortgage

VA IRRL

VA Renovation Loans

Portfolio Option for over 10 financed properties;

Portfolio Loans - When Over 10 Financed

@William D.

The payment is calculated based on interest, loan amount, term, taxes and insurance. You won't need a down payment as long as the LTV is supported versus what you owe currently on the property. There will still be closings costs on the loan. A SFR can be cashed out at an LTV of 75% and a MFR at an LTV of 70% with conventional.

@Jennylynn Caldona

There are renovation loans but you are limited to 4 financed properties, including subject. Will this be your 4th house financed? or is it your 5th - if you already have a primary. 

Are they including the rental income from your other properties? 

@Lori Greene

I have clients do this all the time  - cash out financing. Many of them use this cash to purchase more property. I think that is one of the best ways to use the money - is to make more money with it. 

@Devan W.

The HELOC shouldn't count against you unless there is a balance and only that payment will count against you.

Plus purchasing a new investment property - you can count the rental income at a 75% value and this will help get your DTI's to where they need to be.

@Ryan Horan

I have had many clients use this route of financing their investment properties. They many times than use the BRRR method to keep financing the next property. Which is buying a property in need of some repairs, fixing it up, forcing appreciation of the property, and then getting cash back out to fund the next deal.

@Kris L.

As others have mentioned the mortgage insurance is high and never goes away. If you have great credit another option to look into is Home Possible. It is a low down payment program with reduced mortgage insurance. The drawback is if you don’t meet the income restrictions, you would have to purchase in a no income restricted area.

@Alex Hamilton

We have all been there and made the mistake. Don’t take it personal, you can just use the opportunity to grow. Just change up your ads and you will see more business. Some ideas are post properties that you think have great potential, or a great price, or would make a great flip and why. You can post statistics about your market and if it is a buyers or sellers market. You can post education on different areas and their benefits and drawbacks etc. 

@Mindy Jensen

And the rest of the BP team do a great job on keeping this site all about helping others and providing education. They are giving us the opportunity to grow.

@Christian Chevier

As mentioned 75% is the limit for conventional cash out financing for a SFR.

Portfolio loans that I am aware of and allow for higher LTV's require loan amount minimums if $100k.