If an investor is not putting 20% or more down he is not a conservative investor, he is a speculative investor. The cost of money for highly leveraged investors is so very much higher than the cost of money for a large down pay investor that the the extra 10% to 15% borrowed is costing an interest rate similar to credit card interest rates. (for the EXTRA money borrowed, not the first 75% LTV of the loan) It does not make cash flow sense to the traditional investor to pay 18% for an extra $10,000 on the loan.
Have you and your hubby considered buying a home under your names? Just curious...
But to answer your question more directly, investors can pretty much count on about 20% down for today's investor's loans. However, I work with some lenders who are quoting 10% down with great credit for the investor and that investor is able to withstand full documentation with their application. If you want me to put your brother in touch with those lenders, let me know.
Good luck -- I hope this helps.
Keller Williams Realty
Your brother's interest might be not only in helping you out but in the tax advantages offered to him while investing in real estate. He would be able to find some great investment properties out there and know that the 'tenant' would be reliable to maintain his investment. If not, I would suggest you not mix business and personal by renting from your brother. Too many relationships are strained if you don't have a clear understanding there.
I would suggest that you get both your, and your brother's motives all on the table and then look at alternatives. If your brother is going to buy it, there are programs that require 10-15% on investment property but other factors need to be considered, such as his credit score, cash flow and collateral strength. These might be the reason that the lenders he has contacted require 20% down.
There are many quality lenders in the Sacramento area that I can refer you to if you need them to shop for other offerings.
Realtor, GRI, ABR, SRES
The Galster Group
For example, it might make more sense for your brother to co-sign with you, so all three of you are on the mortgage and on the deed. That way, you might be able to get the preferred homeowner financing, while--structured properly--he could still get certain tax benefits.
That's very similar to, and could be structured as, an equity sharing arrangement. (Just Google "equity sharing" for more information.)
Even going with the scenario you proposed, no, he doesn't need to put 20% down. Shel-lee provided some of the more "conventional suggestions," which are definitely worth following up on. Your brother might also find someone willing to do owner financing, or a lease-option. With a lease-option, your brother probably would have to put up far less. It's all negotiable, of course, but it might only take the equivalent of 3-5 months of lease payments--in the form of an option fee--to set up the lease-option. Have him make sure that the option is assignable, so that if in the future you wanted to purchase the property, you could do so directly from the owners.
Hope that helps.
It is really wonderful that your brother is willing to help you out like this. With such a great brother, why not look into buying the home yourself and having your brother co-sign on the loan. FHA allows a co-signer for qualifying purposes but only requires a 3% down payment. If your brother is looking for an additional tax deduction he should check with his tax advisor on whether or not he would be able to take any deduction in this scenario.
Other options might be to work with a realtor and lender who specialize in 1st Time Homebuyer representation. In So California there are many city and county programs, in addition to the state and federal programs available to help 1st time homebuyers purchase a home with $0 out of pocket costs. You might be surprised what you can buy with some govt help.
If you would like a referral to someone in your area that can help you out, contact me. Since I specialize in 1st Time Homebuyer representation, I can refer you to lenders and/or screen realtors to insure you work with a true pro in your area.
Good luck fulfilling your dreams of living in a home.
Real Estate Consultant
RE/MAX Palos Verdes Realty
if he already has a house in his name and this property that he is buying is close to his home, cheaper than his previous purchase, smaller in square footage, then the lender mostly requires 20% down.
Best of Luck,
Hope this helps
First team Real Estate