My first 3 unit multifamily what kind of loan should I expect?

[Ryan S.]

I live in the Chicago area and found a 3 unit apartment that I am interested in.  I ran the numbers, like the area and started looking for loans. 

Was extremely surprised when Firstmerit bank told me that it would be 

30 yr

4.75%

25% down payment! 

I thought I would be putting down around 10-15% am I looking at the wrong bank?  They told me that this is considered an investment property even tho I would be living in it and it is under 5 units.

Any recommendations on banks that will help fund this deal with a lower down payment and interest rate? 

[Sohrab Khosravi]

Hi @Ryan S.

I am a loan officer and this is what I know on this subject. If you are looking for a conventional loan and you are not living in the property, it will consider as an Investment you need to put 20 % down up to four properties and after that it goes to 25 % (this is on SFRs)

If you are looking at up to 4 units and not just a single family you need to add 5 % more to your down payment.

If you want to live in one of the units you do not need this much down payment with conventional you need around 10 to 15 % and for FHA you need 3.5%, but you need to live it the property for at least 1 year before you move.

If you can, I think the best option will be FHA.

Also, you can start looking for the bank that go portfolio loan, but the interest rate and term will not be as good as conventional loans.

Hop this help