Do I need 25% for Conventional Mortgage in Rochester, NY?

Question

Hello! I am looking at purchasing a property in Rochester, NY. I have a family friend who is an investor/realtor in the area and is helping me with the process. He told me that the bank that he usually works with typically requires a 25% down payment. I have found a fourplex that appears to make financial sense, except that I would not be able to afford a 25% down payment at its price point. I could however afford 20% down particularly if I could get the sellers to give me a credit towards closing costs. Are there lenders that would be more flexible regarding this? Am I better off just waiting and finding a property that more comfortably fits in my budget while continuing to save?

Jim Bice · Answer

Hi Sarah I am from the area too. I have been shopping around for loans as well and I have found that for investment properties up to 4 plex they require 30% down which is frustrating. The fourplex is being sold by another investor?!? Maybe ask if they could hold note for a year and give them a lower down payment. I have been looking at creative financing to avoid the 30% down. Good luck to you.

Mark Lewis · Answer

AmeriCU Credit Union out of Rome NY does 20% down but needs to be no less than 50% on the vacancy end. Hope that helps.

Enyi Ajoku · Answer

I think you need to shop around. No harm in asking and all they will say is NO.

I assume as this is your first property in the area. You could use this to build relationship with the bank and they could be flexible next time.

Sarah Rothenberg · Answer

Thanks for all of the advice! I will have to crunch some numbers and see if I can make it work. My big concern is making sure I have enough reserves, particularly given that I am fairly new to real estate investing.

Eric Veronica · Answer

if you are looking for non-owner occupied conventional financing on a 2-4 unit investment property then 25% is required.

You should also be aware that seller contributions on investment properties are limited to 2% of the purchase price.

Chad Ellis · Answer

Hi. You could probably find a bank willing to accept a smaller down payment, but I think your concern about having to put 25% down is probably a red flag for the deal. If the price is good and you’re ready to invest the difference between 25 and 20% shouldn’t be a big deal. Without further details I’d say you should hold off until you find a property you can buy comfortably.

Do I need 25% for Conventional Mortgage in Rochester, NY?

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