20 percent down, always? (is it possible to do less?)

[CL Ziegler]

Hello,

Is the 20% down payment guideline a fixed rule across the industry? Or, is it possible to get a mortgage on rental property for a smaller percentage down payment? (maybe 5-10%, or even *gasp* no money down?)

Also, does a lender take into consideration that a property is to be rented, as a factor of repayment? For example if you are obtaining a mortgage on a known rental unit with a proven track record, could a lender factor that into the equation, thereby requiring less down?

Thanks in advance for any insight you can offer me.

[Duncan Taylor]

If you are getting a loan from a non-portfolio lender and it is non-owner occupied, you will be looking at a max of 75% LTV. Although, I read some guidelines recently indicating that might go down to 70% LTV for non-owner occupied loans.

You could try the smaller banks and if you are credit union member, try that. If you aren't a credit union member, fix that problem today.

You could also look at less formal lending options. Hard money for VERY short term transitional funding, or private debt placement or crowd-sourcing under the new SEC guidelines.

Most lenders will not consider the track record of a rental you are buying. They will consider the rental history of a rental you have owned for more than 2 years and fully document.