3.5% (0 money down situation) vs 10% down

[Maritza Pedlar]

Hi BP community!  I am closing in on my first duplex in Philadelphia in the 19140 zipcode.  I will be house-hacking.  I've been living in Philly for 5 years and I'm cool with the area, I like North Philly!

I'm purchasing a home and currently have 15k in down payment assistance available to me.  Using this assistance I can do 3.5% down on the home and not come out of pocket at all on this purchase.  I originally planned to put 10% down using a combination of my assistance and funds.  

This is an investment property- in the future I would not be living there and I'd have the entire property rented.  WITH ME NOT LIVING THERE in the 3.5% scenario cash flow (not accounting for expenses) would be about $725 and and in the 10% scenario cash flow would be about $785 per month.  I do plan to buy and hold, and since it's an older home I'm thinking about 30-25% per year would go towards vacancies/upkeep.  I understand I'll be a little negative while living there, but it still will be cheaper than rent-so that's not an issue to me.  I also am not going into this with hopes for appreciation in the future, if it happens it happens.

My questions are:

1) Which scenario would be more beneficial in the long run?

2) Should I do a lower down payment so I enter with more money in my reserves for upkeep/vacancies?

3) What's the benefit on a higher down payment if I am not eliminating PMI by reaching 20%?

I was trying to get advice from some people but most people I know are looking to buy their forever home and are not thinking from this point of view.  So in my circle this is unconventional.  So I was hoping the BP community would be able to share their opinions based on experience.

Thank you!

Mari