Duplex loan with 15% down?

Question

Hello,

I am about to buy a duplex at about 300K and wondering if I can make a conventional loan with only 15% down (or less). Assuming I have a good source of income (day job) and good credit score. I understand that I'll have to pay PMI but from my analysis, 15% down with PMI give me much better CoC than 25%. Please recommend some good lenders if you know any. Thank you!

Chris Mason · Answer

15% down niches that are Fannie/Freddie backed...

• Owner occupied duplex.
• SFR investment property.

15% down on an investment property duplex is outside the Fannie/Freddie box. So, if you can find it, it'll be 2 out of the following 3, if not 3 out of 3: ARM, high rate, multiple points upfront.

If you discover that I am incorrect in that claim, and they are lending in California, please post who the lender was so I can start brokering loans to them. :)

Nathan Click · Answer

@Chris Penny I here this question, or one like it, often. I work with lenders from all over the nation, so I'd like to think I have a little bit of expertise.  To answer the question bluntly finding a reliable, honest lender that will let you get away with that little skin in the game and no seller carry is like looking for a virgin at the playboy mansion.  My advice to you is that if you can afford a 25% down payment simply find a broker or lender that can get you good terms.

Brent Coombs · Answer

Here's the official Fannie Mae link showing that 85% (ie. 15% deposit) conventional investment loans are strictly for SINGLE Units, not duplexes or larger:- https://www.fanniemae.com/content/eligibility_info...

Good luck finding a conventional loan that ignores that directive! Cheers...

John Matthews · Answer

@Chris Penny Understood, and that's what I was running into when I started.

The way I got around this was by buying an undervalue property with short term lending (hard money / private money), then stabilizing the property (rehab / raise rents / remove problem tenants, etc.) then refi out your entire position.

Example: My second property was a duplex that I bought with private money. I bought for $45k. The lender charged 12% interest for a 6 month term with a 1% origination fee with 10% down. In this case the tenants were both paying, the property was in great shape, the seller just needed to close quickly, they were behind on bills. I found a lender who didn't have a seasoning requirement, and refinanced with them in 3 months. The property appraised for $100k, and I was able to get a conventional loan for a bit over $70k. I then was able to use the proceeds to buy another property.

Have you considered other alternatives to increase your ROI?

Caleb Heimsoth · Answer

@Chris Penny PM me if you want to chat more, and let me also dig through my old emails with them to make sure I am correct.

Christopher Phillips · Answer

@Chris Penny

I do, on occasion, come across lenders that offer 15% down conventional loans for investors. You just have to shop around and see who can do that for you.

Debbie Gilliam · Answer

@Chris Penny I have a great mortgage banker here in Oklahoma - he is a real estate investor, too.  I'm not sure that he would do 15%, but he is has been really good to us and he will shoot straight with you. His name is Daniel Flannery.  I'll private message his contact info to you.  Best wishes.

Chris Penny · Answer

@Christopher Phillips That is exactly what I heard from one of the BP Podcast, I don't remember exactly but the guest was able to pull up a loan like that by shopping around.

@Caleb Heimsoth Do you have contact of this lender?

Chris Penny · Answer

@John Matthews It's not that I can't afford 25% but I would prefer to put only 15% or less as the numbers look better, and I can use the unused cash to invest in another property.

Duplex loan with 15% down?

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