Down payment on investment property? (loan, interest rate, real estate, foreclosure)

[CGab]

My DH and I are looking to buy a home for the sole purpose of renting it out for income. We have excellent credit scores (790-810) and want to only put about 10% down. The lenders I have spoke with thus far are stating we need to put 25% down if it is not owner occupied. Does anyone know of a lender who will except less of a down payment? We want to keep the cash to make any upgrades that might be needed. Thanks!

[Pfhtex]

You can do a 15% down payment on an Investment Property, with a non-conforming loan, and the rate will be around 7%.

[oldtrader]

I spent from 1972 until I finally retired, as an investment real estate broker. I only worked with investors, and from many years of experience can tell you that it has always been 20% to 25% down payment for investment property. Otherwise the interest rate is so high with non conforming loans for Income Property the property will not be a good investment to make. I once sold 14 single family homes in one day to investors (a 13 unit to be built subdivision and one home needing sold that day to avoid foreclosure all sold on the telephone) with one man buying 5 and no one less than 2, and even with high income people involved one man working overseas in top management for an oil company, 2 doctors, etc. with perfect credit scores, they still had to come up with 25% or more down payment. If they allowed 10% down payments on income property the man that bought 5, would have bought 10 homes.

Low down payments are reserved only for personal residences, and to be low they have to be insured by something like the VA with no money down, FHA, etc. Income property does not qualify for these special cases.

[luv4horses]

You could try for owner financing (but it is unlikely the current owner would like those terms unless he was desperate).

[Pfhtex]

CORRECTION:

25% down is required for multi-unit Investment properties (2-4 units).

Single-Family investment property is ok with a 20% down.

[jm1982]

Fannie Mae Home Path used to offer 10% down loans on their properties but pretty sure that’s done . I just searched and all the info that came up was from years ago .

Investment loans are viewed more risky and their are less incentives versus home ownership.

You can buy a 2-4 unit property with a 3.5 % down FHA Loan but you would have to occupy one unit .

You could find a property that needs work , and do the repairs and then do a cash out loan and get all or most of your money out on the right deal .. and then you have basically nothing in the property .
But you’ll likely need to have all the cash to do this most efficiently .
You can look up the BRRRR method if interested . Many people seem to be using this method to scale their holdings quickly .

Rough example might be buy for $100k , do $20 k in rehab , then rent out then new value is $160k .. refinance out at 80% , get your cash back .. repeat process .

[CGab]

Thanks for all the info everyone!