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Down Payment for 2nd Home

Asked by Voices Member, Thu Mar 14, 2013

What is the lowest down any of you lenders can do for a second home? I have spoke with 3 of my lenders that I use and they all say 10% with really good credit. Does anyone know of a lender who will go less than 10% down for a second home?

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16
"My statement stated "may be" creating less risk by for borrowerss by making application as an occupant"
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Now you are just not telling the truth. The English language is not that complicated. The "may be" in your original post was referring to the possibility of the creating an owner occupied scenario, as in maybe you could. The "may be" was NOT in regard to to risk for the borrower. Also, what planet are you on where the borrower is the one that assumes the risk of owner occupied versus second home? You fully well know that what you said and meant was that it would create a perceived, false lower risk to the lender by being owner occupied and create better terms for the borrower.

Nice try.
1 vote Thank Flag Link Thu Mar 14, 2013
That's a great answer now Dave, but that's not what your original intent was. You were clearly spelling out how to "CREATE an owner occupied scenario." There are many experienced loan officers that understand the guidelines but don't use them to "CREATE owner occupied scenarios.


This statement:

"And know there may be a possibility to create an owner occupied scenario and reduce the risk. "

...Is an inducement to fraud. Plain and simple.
1 vote Thank Flag Link Thu Mar 14, 2013
Truly amazing Dave,
So your suggestion to someone looking for a second home is to "Put your adult child in the home with a non-occupying parent?"

Apparently you didn't read the next line in FHA guidelines. Let me post it here for you:

Important: Under no circumstances may investors use the exceptions
described in the table above to circumvent FHA’s ban on loans to private
investors and acquire rental properties through purportedly purchasing
“principal residences.”
1 vote Thank Flag Link Thu Mar 14, 2013
who approved you for 10% down?? i have excellent credit and 10% on the 2nd home i would like to buy but everyone is telling me 20Z% down
0 votes Thank Flag Link Tue Oct 29, 2013
A 10% down payment should not be an issue using conventional programs (conforming loan amounts). I have closed a couple in the last few months.
Flag Wed Oct 30, 2013
Try to call Donna Avram she may be able to help you 602-690-7337
0 votes Thank Flag Link Tue Apr 30, 2013
10% is the minimum down for a 2nd.
0 votes Thank Flag Link Sun Apr 21, 2013
(excluding private money which is usually very expensive - or a seller carry, essentially private money from the seller of the home)

Fannie Mae and Freddie Mac are the only entities that will back a home loan for a second home purchase. (FHA, VA and USDA will not) This would be as a conventional conforming home loan and the loan would conform to their guidelines. Until they change their guidelines and make arrangements for mortgage insurance coverage for that risk, a purchase transaction for a second home requires a down payment of 10% and yes you would need really good credit as well.

It isn't the lender since lenders will make loans that they can sell. It is who will buy those types of loans and in the case as stated you would also need to get mortgage insurance. Fannie and Freddie are not buying or backing second home purchase transactions with less that 10$ down.

Dave Jackson
Loan Officer/Real Estate Asset Planner
Financing Solutions for Arizona Real Estate since 1993
American Financial Lending, Inc.
20860 N. Tatum Blvd, Suite 160
Phoenix, AZ 85050-4277
602 277-3800 w
602 631-9788 f
602 524-2401 c
602 912-9438 h
davej@aflhomeloans.com http://www.aflhomeloans.com
BK # 0910057 NMLS LO ID # 284875
0 votes Thank Flag Link Sat Apr 20, 2013
Hello:

I don't want to open up old wounds with Gregorio and Dave, nor has the strand anything to do with Ted's original question (Hi Ted, still working with Dr. Wall. Just sent him another Offering Memorandum yesterday), but since we are talking about mortgage fraud, I thought I would tell a related story which might be of interest to many.

(Gregorio and Dave, btw: It is great to see two licensed Mortgage Loan Originators ("MLO's) arguing over which one is the more ethical! Dave, while I appreciate your creative thinking on behalf of your clients, and have done "Kiddie Condo" loans myself for students going to ASU, you gotta admit, you could have chosen better language and explained the narrowness of the scenario--it sounded bad. Nice to see a segment of the industry starting to understand our fiduciary duty to people seeking our professional advise.)

STORY: Another MLO gets a call from a Dad, wanting to buy a home for his son. Very reluctant to provide normal documentation ("What business is that of yours?"--know you are in for a long deal). Goes on longer than should, of course, because puts up roadblocks all along. The MLO figures just a jerk. Dad buys as primary residence "by making application as an occupant, agreeing to that obligation in a notorized document and actually occupying the property is acceptable in all of the guidelines mentioned below." Well, this guy does the first two; loan is closed; all set right? Bundler of loan sends someone out two weeks later and there are tenants in the property...

They won't buy the loan since done as primary. The MLO calls up the Dad and asks him what is going on. His response "What business is it of yours? I don't owe you an explanation." (Steam coming out of MLO's ears). Branch manager calls and explains how mortgage fraud works and if Dad does not pay off loan within 10 business days, he will be facing a lawsuit for a federal crime...Dad suddenly realizes the error of his ways and pays off the loan. Oh, and guess what--MLO does not get paid, because loan did not stay on the books six months. (More steam coming out those ears! Did nothing wrong; spent days working with a jerk; and, then has to pay back what she made on the deal).

So, the borrower moral of story is not only is it simply wrong to commit fraud, it can land you in a ship load full of trouble. For MLO’s, be on the lookout and keep those licenses, folks.
0 votes Thank Flag Link Sat Apr 20, 2013
My statement stated "may be" creating less risk by for borrowerss by making application as an occupant, agreeing to that obligation in a notorized document and actully occupying the property is acceptable in all of the guidelines mentioned below.

And your post could be inferred by stating FHA guides about private investors that you are steering the borrower into a high cost investor loan. Your alluding that this is an investor would would dictate a higher cost loan. Many laws as of late have been passed against steering and high cost lending.

And underwriters don't underwrite based on posts to a website.

Dave Jackson
Loan Officer/Real Estate Asset Planner
Financing Solutions for Arizona Real Estate since 1993
American Financial Lending, Inc.
20860 N. Tatum Blvd, Suite 160
Phoenix, AZ 85050-4277
602 277-3800 w
602 631-9788 f
602 524-2401 c
602 912-9438 h
davej@aflhomeloans.com http://www.aflhomeloans.com
BK # 0910057 NMLS LO ID # 284875
0 votes Thank Flag Link Thu Mar 14, 2013
It isn't my suggestion to make.

It is understanding the guidlines and knowing the borrowers situation. Very little is stated in the original poster's question (situation) and he did not say he was an investor and he isn't looking for a loan on an investment property.

I have had clients many times looking for home near a college (ASU one of the largest in the country) to place their child, thinking there was only one choice. Not always is there one choice and nor do I make the decision for the client as to what choice they need to make. An informed client can make the choice.

Dave Jackson
Loan Officer/Real Estate Asset Planner
Financing Solutions for Arizona Real Estate since 1993
American Financial Lending, Inc.
20860 N. Tatum Blvd, Suite 160
Phoenix, AZ 85050-4277
602 277-3800 w
602 631-9788 f
602 524-2401 c
602 912-9438 h
davej@aflhomeloans.com http://www.aflhomeloans.com
BK # 0910057 NMLS LO ID # 284875
0 votes Thank Flag Link Thu Mar 14, 2013
Put your adult child in the home with a non-occupying parent. With a loan amount under $271,050 (in Maricopa County) the transaction is now acceptable to a FHA as an insurable owner occupied home loan. Other relationships may work, however the defination is a very close relationship. If the relationship isn't the typical family relationship then the borrower would have to document the relationship is close.

Asumptions for this FHA scenario with a 3.5% down payment -
~Only for a single family properties
~Adult child has no negative credit and no current home ownership (Income and assets not needed) Also the proximity of the home is reasonable for the adult child's situation
~Parents have enough income, assets with credit to make the qualifications for loan approval

Fannie Mae and Freddie Mac with 5% down payment are possibilities as well however they are far more restrictive than FHA.

Dave Jackson
Loan Officer/Real Estate Asset Planner
Financing Solutions for Arizona Real Estate since 1993
American Financial Lending, Inc.
20860 N. Tatum Blvd, Suite 160
Phoenix, AZ 85050-4277
602 277-3800 w
602 631-9788 f
602 524-2401 c
602 912-9438 h
davej@aflhomeloans.com http://www.aflhomeloans.com
BK # 0910057 NMLS LO ID # 284875
0 votes Thank Flag Link Thu Mar 14, 2013
"And know there may be a possibility to create an owner occupied scenario and reduce the risk. "
----
Dave, I'd love to hear more about how you turn a second home into an owner occupied scenario to reduce risk.

Please share.
0 votes Thank Flag Link Thu Mar 14, 2013
FHA, USDA and VA only back owner occupied home loans.

For a second (vacation) home or rental property the loan would be one that conforms to Fannie Mae and Freddie Mac guidelines. The guidelines for Fannie and Freddie on a second home is a minium 10% down payment. This is because we (the lenders) are all delivering loans that will be backed by Fannie and Freddie.

To get something with less down payment in that scenario means it is a non-conforming home loan. The loan does not conform to Fannie and Freddie guidelines. Which is alos high risk. We lenders are are a very risk adverse group. So until Fannie and Freddie change the guidelines (which happens) 10% down for that scenario.

And know there may be a possibility to create an owner occupied scenario and reduce the risk.

Dave Jackson
Loan Officer/Real Estate Asset Planner
Financing Solutions for Arizona Real Estate since 1993
American Financial Lending, Inc.
20860 N. Tatum Blvd, Suite 160
Phoenix, AZ 85050-4277
602 277-3800 w
602 631-9788 f
602 524-2401 c
602 912-9438 h
davej@aflhomeloans.com http://www.aflhomeloans.com
BK # 0910057 NMLS LO ID # 284875
0 votes Thank Flag Link Thu Mar 14, 2013
You have been given correct information 10% down is the minimum.
0 votes Thank Flag Link Thu Mar 14, 2013
No it looks like 10% is the minimum Theo. Thanks and have a great day.
0 votes Thank Flag Link Thu Mar 14, 2013
Haha get lost Cup Check
Flag Thu Mar 14, 2013
No. Ten percent is the minimum.

Brian Cardenas
AmeriFirst Financial, Inc.
0 votes Thank Flag Link Thu Mar 14, 2013
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