Low money down options

[Chase Rule]

A mentor of mine with 400 units had said I can use a large seller credit to cover most of the down payment on a property I'm looking at. The DSCR lenders and Commercial bankers I've spoken with don't know what I'm talking about. Any help?

[Jason Taken]

Quote from @Chase Rule:

A mentor of mine with 400 units had said I can use a large seller credit to cover most of the down payment on a property I'm looking at. The DSCR lenders and Commercial bankers I've spoken with don't know what I'm talking about. Any help?

 Most of the downpayment yes. Typically, you'll still need about 10% into the deal though. Its a product we offer, just doesn't get a lot of play, because its a pain to refinance that seller out down the road.

[Mike Manchester]

Your mentor is right, but within limits. Lenders are almost universal in their requirement that a borrower has "skin in the game". So while a seller credit can reduce your overall cash out of pocket on a deal, lender guidelines typically won't allow for it to cover 100 percent of your down payment. There are some smaller home-office type lenders that will, but that is usually very expensive capital. 

[Chase Rule]

The seller credit would cover about 15% of the DP, I could easily come up with the other 5% and closing cost. Are there any lenders or private DSCR lenders you'd recommend ?

[Mike Manchester]

Quote from @Chase Rule:

The seller credit would cover about 15% of the DP, I could easily come up with the other 5% and closing cost. Are there any lenders or private DSCR lenders you'd recommend ?

Most DSCR lenders are usually going to want to see more equity contributed directly from the borrower, however there are some shorter term options that might work for you. I'd need to know more details about the property and the business plan to make any worthwhile recommendation. If you'd like to direct message me I'd be happy to jump on a quick call and go over the details.

[Craig Warner]

If you are speaking of seller concessions (IPC's Interested Party Contributions), they are typically limited to 2-6%. Perhaps you are referring to a seller carry back? 

Our max DSCR is 80% LTV and CLTV. Means no seller carryback above 80%.

Using gift funds may be an option as well. Here is some info on that as for"skin in the game".

Gift funds are acceptable as 100% down payment for loans <75% LTV/CLTV
 Gift funds are acceptable for loans >=75% LTV/CLTV; however, the underlying Borrower(s) must contribute at least
5% of the transaction (lower of Purchase Price or Appraised Value) from their own funds
o Example: A $500,000 purchase price where the LTV/CLTV is going to be 75% or higher would require the borrower to have a $25,000 of their own funds provided ($500,000 x .05% = $25,000)

[Brandon Croucier]

Hi Chase,

I know a few funds that allow up to 90% CLTV, lending up to 75% in 1st position.

If you can find a seller willing to do a 15% seller carry back on a 3 year minimum term, 10% down is a real possibility!

[Patrick Roberts]

Conventional investment property loans cap seller credits at 2%. DSCR programs vary, but getting away with putting less than 10% of either the purchase price or appraisal amount (whichever is lower) is rare. You could look at a seller carryback 2nd (seller-financed 2nd position loan), but DSCR lenders will vary in whether they allow this and by how much.