Wondering if i can spend less on my down payment !

[Frankie Paterno]

Hello everyone ! So recently i have been looking to purchase a home and im wondering if all

This sounds correct .. house would be 525k mortgage lender said figure this is what i would need roughly for a conventional loan. Btw i am a first time home buyer ! He said 26k down for DP and another 20-25k in closing cost, does this sound right ? I see people spending way less then that and snagging houses ! I’m trying to get into the real estate investing world by purchasing my first home and renting out the basement, refinancing in a year and buying more property with the money i receive back. I have roughly 90k set aside for investing just want to go about it the correct way !! I’m located in Staten Island NY ! For anyone looking for a partner for the future for flips etc. i know some things but looking to learn more as well I’m all game !!!

[Brenden Mitchum]

Hey @Frankie Paterno

Sounds like a 5% down conventional loan is the product your lender is suggesting, correct? If this is the case, you may be able to get down to 3% with a little higher rate. I would ask or speak with another lender for a second opinion. 

$20-$25k in closing costs sounds insanely high to me. Typically cc are around 2% of purchase price. It is possible that they are factoring in a ton of discount points which are probably not necessary since rates are already so low. Ask them about the discount points or for a breakdown of closing costs. Again, I would also speak with another lender or two for a second opinion. 

Another issue here is your refinance plan. If you purchase at 3-5% down you will almost certainly not have enough equity in the home in a year to refinance at an 80%LTV, which is standard. In fact, with the future so uncertain, who knows if your home will even be worth more in a year than it is now.

This could still be a great way to offset some costs or maybe even cash flow depending on how much income you'll be receiving. However, this is not a good strategy to recycle capital for another investment in the near future. 

Please, feel free to reach out anytime if you have other questions or just want to chat!