Multifamily House Hack Down Payment

[Colin Curtis]

Hello everyone,

I'm looking to begin my real estate investing journey by way of a small multi-family house hack. I had read that it was possible to put less than 20% down using a conventional loan as long as you live in the property for a year. After speaking with 2 mortgage lenders however I've found that they won't allow less than 15% down on a traditional mortgage if the property has more than 1 unit, even if you intend to live in one of them. Do you think this happens to be the policy of these 2 lenders or a standard across the country/state? I appreciate the help!

[Kevin Romines]

Beside FHA at 3.5% down payment, you can also do a Freddie Mac Home Possible loan as little as 5% down up to 4 units. There is income limits and you can only own 2 properties max. including the property you are buying, so essentially 1 other property. This is an owner occupied loan, so it requires 1 year occupancy.

Here is the better solution, buy the 1st one with FHA, then after 1 year, buy another one with Freddie Mac's Home Possible. Then after 1 more year, refinance the FHA to a conventional loan. Hopefully you have 25% equity by then. Then because you refinanced the 1st purchase to a conventional loan, now use your FHA to rinse and repeat as many times as you like. With 3 multi's under your belt, it should throw off enough cash for you to paydown the mortgages to 75% LTV and allow you to keep buying using FHA once a year!!!

Go for it.