first investment, mortgage loans?

Question

hello:)

looking into buying my first investment property in southern new Hampshire and was curious as to what banks gave better loans and what mortgage loans to look into for the best financial outcome? my credit is fair, and i dont have much for downpayments. but i was told its still possible! very new at all this and feed back is welcome:)

Hannah Woodward · Answer

thank you matt! and thank you Joseph!

Matt Lefebvre · Answer

Hello @Hannah Woodward and welcome to the wonderful world of real estate investing!  If you're not planning on owner-occupying a property, most banks will require a minimum of 20% down for any residential multifamily (4 units or less).

If you're able to occupy one of the units for at least a year, you have a could of options.  You could go with an FHA 3.5% down loan.  The downpayment is practically as low as they get (save a couple of exceptions like VA or USDA loans which have special requirements) and the credit score requirement is lower than most traditional loans.   The downside, as @Joseph Murray point out, is that you do have to pay PMI for the life of the loan... which really adds up over 30 years.  If you have a little bit more money to cover a downpayment and your credit is a little stronger, I work with a great lender who has a 5% down, Freddie Mac program with PMI only until you hit 20% equity, it which point, it disappears forever!  It'll certainly save you a lot of money in the long-run.

Hannah Woodward · Answer

thank you very much!!!!!:) very helpful

Megan Frank · Answer

I am more in the seacoast area, so I do not have any recommendations for lenders. You can definitely buy an investment property for low money down though, especially if you are willing to live in it for a year. I recommend using an FHA loan and putting 3.5% down and including closing costs in your offer so you save even more money up front. I would google FHA lenders in your area, and if property investing is something you think you may be doing a lot of, it might be a good idea to  find a local lender that also does portfolio loans so you can eventually have all your loans from the same bank. They are more likely to invest big in you if you invest big in them. Best of luck to you!