What percentage can I expect to put down?

Question

I’m loooking at purchasing a small multi-family (3 unit) brownstone in Brooklyn for around 1.5 million. I plan on moving into it and renovating and renting the other units out. I am just starting discussions with mortgage. I want to put down as little as possible. I’ve seen some low percentages stated here but the first words out of the mortgage broker were “twenty percent”. If I shop around, can I expect to get a significantly lower number? Ideally I’d like to put down ten percent but I’m new to this and don’t know how realistic that is. Some facts: - it will be my only mortgage - I have excellent credit - I have a decent nest egg - I expect to get about 4-5K from the rentals, once they’re renovated. Any tips are welcome!

Chris Mason · Answer

At that price point and unit count, I can't think of any obvious ways to shove it into one of the gov't subsidized low down payment programs off the top of my head.

Nick Hedberg · Answer

Look to see what the FHA guidelines are for your area. In LA it’s up to $1.1M for a 4 unit. For $1.5M you might be able to find someone that can do 10% since it’s owner occupied. Call a bunch of lenders in your area. They will be able to give you an answer in minutes.

Chris Mason · Answer

At $1.5m as a triplex, it's going to be a "jumbo" loan.Each jumbo investor / end-lender has their own 150+ pages of requirements on top of the standard Fannie/Freddie stuff that everyone has memorized. When most folks hear "portfolio loan," they think of laxer requirements. With jumbo loans, which are all portfolio, it's the opposite. So someone might have a jumbo triplex product at 15% down for owner occupants, and another at 10%, but if it requires the credit report show 3 tradelines open for at least 24 months with activity showing on at least 2 out of the 3 in the lats six months, 24 months of PITI reserves, no >30 day job gaps in the last 2 years no matter the reason, and a bunch of other stuff unheard of in Fannie/Freddie world, then there's no point in getting you excited about it until the lender has all that paperwork in-hand... Credit Karma is wrong, consumers accurately state their total usable assets less than 5% of the time, and the majority of Americans do not understand that if they get a 1099 then they aren't an employee. It's simply more time efficient, for all parties, for you to take 15 minutes to upload standard paperwork, than to verbally go over each and every jumbo loan program there is since (unlike Freddie/Fannie/FHA/etc) they vary so much.For jumbo loan applicants, here's my process:1) Get all paperwork.2) Loan file on left side of desk.3) Pull up rate engine, sort by lowest rate.4) Grab the winner's 150 pages of guidelines, put on right side of desk.5) Typically the borrower will not qualify for the best jumbo product out there (sometimes they do, and sometimes they don't because the borrower chose to hide a retirement account for some reason). Set aside #1 best rate jumbo lender's guidelines since they've been ruled out.6) Take out #2 best rate jumbo lender's guidelines, place on right side of desk.7) Repeat steps 4 through 6 until a hit is found.For big banks and credit unions, which typically only have their one jumbo product ("BankName Jumbo"), the process is amended since they only have steps 1-4 available.

Account Closed · Answer

I’ve spoken to two mortgage brokers and they both seemed to want W2s and bank statements before telling me whether anything less than 20% down is possible. Is that normal?

Anthony Perez · Answer

The problem is, the FHA loan is usually for people with lower incomes trying to get into a home. Trying to justify a 1.5 millon purchase and putting little money down is kind of hard. I would comply with the lenders asking for your W-2 and bank statements. Just don't let them run your credit don't let them ding your credit at all. I repeat do not let them check your credit you should be upfront with that the second you go and sit down with them. They will sometimes run your credit without asking you. Anyway you might be able to find a lender to do it for 10% you're just going to need to shop around like Nick mentioned.

Tyler Delbert · Answer

You can qualify for a FHA loan to buy a multi-unit dwelling as long as you live in one of the units as your primary residence. Minimum down payment is only 3.5% for FHA products. But there's loan limits for that product.

Julie N. · Answer

Investors pay 25% down payment on non-owner occupant multi-family homes.