Hard Money Lending to cover mortgage downpayment?

[Gabriel Isaac Hazout]

I was wondering if getting a hard money loan to cover the down payment of a traditional mortgage is a viable option. It would increase the leveraging potential. Would you guys recommend pursuing such a thing, or would it even be possible? Maybe too risky?

[Jay Hinrichs]

Quote from @Erik Estrada:

Unfortunately most conventional lenders will not lend on borrowed funds for a downpayment. It will also be tough to find a hard money lender to lend on a downpayment. If this is a primary residence even going 3% down would be a better option than doing this strategy. On the other hand, if this is your first investment property and you have never owned any properties before, most lenders require that you have a history of ownership. 

A great way investors get started is through house hacking. Own your primary and rent out the other rooms. From there you can add value to your property and build up enough equity to do a cash out refinance. Use those funds to buy an investment property. 

when I first went to work for a HML and when i bought my first home in 79 in SF Bay Area.. this was common you had what was called 80 10 10 80 from bank they would go no higher.. 10 from HML in second and buyer had to have 10% and the company i worked for had done thousand of these little 10 to 20k loans over a 35 year period.. about 1990 this petered out .. and fha 3.5% or what ever the low downpayment programs came into the market and put that model out of business..

So NO no HML company is going to give you a loan in second position and to 100% LTV.. at least as a one off borrower waste of time even looking.