100% Financing? (80/20 loans)

[Tracey Dixon]

Hi BP! I've finally taken the leap and begun my REI journey. I'm currently trying to determine which type of loan I want to use with a lender. This may be a no brainer question, but seriously need advice. Based on my credit score (over 800) and finances, the lender is offering me 100% financing (80/20) on a conventional loan- owner occupied Single family residence.

It sounded great. But as I think about it more my understanding is that I’ll have two loans, two mortgages, two separate payments, and this would increase my debt - income ratio, correct? Are there other risks? Would the 1% rule apply?

I am in the market for a multifamily investment property and qualify for an FHA loan as well. Conventional would be to much for me to put down at 15-25%. Since multi families are hard to come by in this area I am leaning towards SFH w/ walk out basement to rent as another option. 80% of the loan covers mortgage 20% covers closing cost…this would help free up my cash.

The only reason I need help is because It seems more of a risk to have 2 mortgages on a SFH especially if it doesn't rent. Your advice is appreciated. Thanks!!!