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Real Estate Investing 101: How to Take Advantage of Low-Down-Payment Loan Programs

Duplex, Tri-Plex and 4 Plex Investment Property
Author: Scott Bialek, Co-Founder of Hurst Lending
Real estate investment can be a lucrative way to build wealth, but it requires careful planning and investment strategies. One of the best ways to maximize profits and minimize expenses is to obtain a low-down-payment investment property loan. This can be achieved by purchasing a multifamily property and occupying one of the units as your primary residence or using a first and second lien to purchase with just 15% down payment. This article will explore the benefits of these strategies and provide examples of how to use low-down-payment loan programs to grow your real estate portfolio.

Hurst Lending’s Low-Down-Payment Loan Programs:

 

Purchasing a Multifamily Property with 0 to 3.5% Down:
Purchasing a multifamily property has several advantages that make it an attractive investment option. One of the most significant benefits is the potential for rental income. By renting out the other units, you can generate a steady stream of income that can help cover your mortgage payments and reduce your expenses. This can also provide a stable source of cash flow that you can use to reinvest in other properties or pay down your mortgage faster.

Another benefit of purchasing a multifamily property is the lower cost of entry. By living in one of the units and renting out the others, you can take advantage of special loan programs that offer low down payments. For example, the Federal Housing Administration (FHA) offers loans with down payments as low as 3.5% for owner-occupied properties with up to four units. The Department of Veterans Affairs (VA) also offers loans with 0% down payments for eligible veterans, active-duty service members, and surviving spouses. By purchasing a multifamily property and living in one unit is the best way to acquire an investment property for a very low down payment.

You can also enjoy tax benefits by purchasing a multifamily property with a low down payment investment property loan. As a real estate investor, you can deduct various expenses associated with your rental property, including mortgage interest, property taxes, and repairs. This can help reduce your tax liability and increase your overall return on investment.

Examples of Low-Down-Payment Loan Programs:
If you’re considering purchasing a multifamily property, there are several loan programs that you can take advantage of. Here are some examples:

FHA Loan Programs: The FHA loan program offers down payments as low as 3.5% for owner-occupied properties with up to four units. FHA loans are insured by the federal government, which makes them a low-risk option for lenders. This allows lenders to offer lower down payments and more flexible credit requirements. FHA loans also have competitive interest rates and allow for higher debt-to-income ratios.

To qualify for an FHA loan, you’ll need to have a down payment of 3.5% or more. You’ll also need to meet the FHA’s debt-to-income ratio requirements, which state that your monthly housing expenses should not exceed 31% of your gross monthly income, and your total debt payments should not exceed 43% of your gross monthly income.

VA Loan Programs: The VA loan program offers 0% down payments for eligible veterans, active-duty service members, and surviving spouses. VA loans are backed by the federal government and offer some of the most favorable terms available. In addition to the 0% down payment, VA loans also have no private mortgage insurance (PMI) requirement and competitive interest rates.

To qualify for a VA loan, you’ll need to have a Certificate of Eligibility (COE) from the VA. You can apply for a COE online or through your lender. You’ll also need to meet the VA’s credit and income requirements, which vary depending on the lender.

Conventional Loans: If you don’t qualify for an FHA or VA loan, you can still obtain an investment property loan with a down payment of 15%. Conventional loans are not backed by the federal government and typically have stricter credit requirements and higher interest rates than FHA or VA loans. However, they may be a good option for investors who have a higher credit score and can afford a larger down payment. If you want buy a property with 15% down you need to work with a low down payment investment property lender like Hust Lending who can provide you a 75% first lien with a 10% second lien and with your 15% down payment. Very few lenders offer the 10% second lien and we are one of the few lenders who offer this program. We hold the 10% second lien on our books and offer this as a convenience to help investors acquire investment property with a low down payment.

Conclusion:
Purchasing a multifamily property and occupying one of the units as your primary residence is the best way to purchase an investment property with zero to 3.5% down using a VA or FHA loan). If you don’t want to live in the property, we can provide you a 15% down mortgage using a first lien at 75% and a second lien at 10% (that we lend to you and hold on our books), and a 15% down. These programs allows you to take advantage of special loan programs that offer low down payments and provides a built-in source of rental income to help cover your mortgage payments. By doing your research and comparing loan programs, you can reduce your upfront costs and increase your potential returns.

Why Hurst Lending is the Perfect Lender to Work With:
When it comes to purchasing a multifamily property with a low-down-payment loan and living in one unit or using a second lien to purchase a property with 15% down we can help. At Hurst Lending, we specialize in providing low-down-payment loans for real estate investors, including FHA, VA, and conventional loans. Here are some reasons why we’re the perfect lender to work with:

  • Experience: With over 15 years of experience in the mortgage industry, we have the knowledge and expertise to help you navigate the homebuying process and find the best loan for your needs. We understand the unique challenges that real estate investors face and can help you overcome them with confidence.
  • Competitive Rates: We offer competitive interest rates on all of our loan programs, which can help you save money over the life of your loan. We also offer a variety of loan options, including fixed-rate and adjustable-rate mortgages, to help you find the best fit for your budget and investment goals.
  • Low Down Payment Options: We offer low-down-payment loan options for real estate investors, including 0%-3.5% down loans, a 15% down payment investor loan, and a traditional 20% down real estate investment loan. These loan programs can help you reduce your upfront costs and increase your potential returns.
  • Streamlined Process: We understand that time is of the essence when it comes to real estate investing. That’s why we offer a streamlined loan application process that can help you get approved quickly and close on your property faster.
  • Exceptional Customer Service: At Hurst Lending, we are a low down payment invest property lender and we pride ourselves on providing exceptional customer service to all of our clients. We’re committed to helping you achieve your real estate investment goals and will work with you every step of the way to ensure your success.

If you’re interested in purchasing an investment property with low money down options contact Hurst Lending today. We can help you explore your options and find the best loan for your needs.

Hurst Lending’s Low-Down-Payment Loan Programs:

REFERENCES

  1. FHA Loan Programs: https://www.hud.gov/buying/loans
  2. VA Loan Programs: https://www.benefits.va.gov/homeloans/
  3. Investment Property Loans: https://www.bankrate.com/mortgages/investment-property-loans/
About Scott Bailek

In addition to being one of the founders of Hurst Lending, I am also an attorney and real estate investor. I have a portfolio of residential and commercial properties. I have been helping our customers buy, sell, and refinance their homes since 2000. Our suite of industry-leading offers helps solve many common situations faced by homeowners and real estate investors. Have you ever experienced the frustration of trying to buy before you sell; Losing your dream home in a bidding war; Trying to obtain a No-Seasoning Cash-out loan; Being unable to get a mortgage because your new or old house needs modest repairs; or simply because you prefer using our funds to close quickly without having to liquidate other investments? Our Industry-leading suite of short-term loans solves these issues. We also offer a suite of real estate investor loan products and a full suite of conventional, VA, FHA, construction and traditional home loans.

Please feel free to contact me directly if I can help provide a loan for your next purchase or refinance, or even if you just want advice on how to get started or expand your real estate investing activities.

Scott E. Bialek
Co-Founder, Hurst Lending
sbialek@hurstlending.com

*Disclaimer: This article is intended for informational purposes only and does not constitute legal, financial, or professional advice. Consult with a licensed professional before making any financial or real estate decisions.

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