25% DP for investment property

[Account Closed]

Hello,

I'm a new investor, and I'm about to purchase a duplex w/ 5% down (conventional).  I have no intentions of living in the property, and it would purely be a nice cash flowing investment. I see that banks typically want 25% down for investment properties, but I'm basically just going to tell the lender that I'll be living there if they ask.  A lender I was working with before I switched to my current one said that between her and I, it would be no problem, because they'll never inquire or actually check to see if I'm living in the property.

I don't really see any harm in it, and I'm fully willing to do it, but I just wanted to get some feedback.  It's a small local bank, not a national one.  The property is a foreclosure and will need a cosmetic rehab, so I want to use my remaining funds for that.  203k is not an option because I've got my last extension and need to close in 30 days.

[Russell Brazil]

There are random audits, and if you are one of the people who is randomly audited you might just end up in federal prison. Is it worth the risk?