How to buy a 2nd multi family w/o putting down 20%

[Eric Brantley]

Hello BPers,

I bought a 4-plex in Blue Springs, MO (15mi East of Kansas City) this time last year. I am looking to purchase another small multi family in the near future.

I used an FHA loan to fund the first property and I have fulfilled my year requirement. I want to purchase the 2nd property w/ an owner occupant conventional loan.

My dilemma is that several mortgage brokers have told me that I need to put down 20 - 25% because it will be viewed as an investment property.

Could someone point me to a lender in Kansas City area that will work w/ me on the required amount down.

Or could someone help me understand why is it viewed as an investment property if I’m going to occupy it?

Obviously, I have a lot to learn about how lending works, but hey this is a start.

[Forrest Faulconer]

Hey @Eric Brantley, in most circumstances you are only allowed to have one FHA Loan at a time, so you will either need to refinance your current FHA into a conventional mortgage structure or look at exceptions. Exceptions may not apply to you since they are typically for growing families or job relocation. So you may be looking at a 15-20% down payment if you go through a bank.

I would look into refinancing your FHA loan. Do you have 20% equity into as that would help? Keep in mind there will be transaction costs for a refinance so weigh it all out.

Forrest Faulconer