Buying a multi family home that already has renters in one unit. How does this impact loan amount and interest rate?

With interest rates nudging below 4 percent, Capt (Join to see), there is a valid question as to how much lower a VA loan can get. Quite honestly, I'm in the middle of financing a home purchase through a genuinely local bank, paying a slightly higher interest rate but also enjoying a much-abbreviated mortgage application process (and enjoying working with a banker who's actually focused on investing in the local community).

On the flip side, TSgt Joshua Duplin, one of the benefits of making a large down payment is that you don't need to pay for mortgage insurance. Banks still equate the ability to make a down payment with an ability to repay the loan, and there is a strong statistical basis for that stereotype.

The traditional rules of thumb still make sense, if you're trying to honestly assess how affordable a particular loan is. The default rates go up the closer you get to a zero down payment, just as they go up quickly the farther you go past a purchase price of three times your annual pre-tax income.

Perhaps my view is skewed from everybody else's, TSgt Joshua Duplin, but buying down the APR with points never seemed to add up when I did the math -- borrowing less always seemed to have a bigger impact on the overall interest cost.

You do have a very valid point about explicitly preserving a cash reserve (or something easily liquidated into cash) to fund those contingency expenses which experience (and Cousin Murphy) says are coming.

I should add that I have never used my VA loan benefit. When I was buying houses in California, the VA limit fell woefully short of funding the purchase price of anything that I was looking at. Now that I'm back in a buying mode here in Maine, the loan limit is not an issue, but I really don't see the VA benefit being worth the hassle -- especially not compared to the convenience of the branch manager having my mortgage application from 2 purchase offers back in his desk drawer and revising it as needed to match the details of the property I'm currently asking to borrow money for. Call me old-fashioned, but I really, really like doing business with people face-to-face and actually shaking hands to close a deal. I would also add that the bank I'm doing business limits its mortgage business to local properties, and they came through the housing-bubble/mortgage-default crisis in good financial shape because their loans were to people with faces for properties that they could assess for themselves. It's a quaint way of doing business, but it works and it's a lot more pleasant than the FHA/VA/big-bank way of doing things.

By my estimate, TSgt Joshua Duplin, dropping a full percentage point from the APR will knock about $55 off a monthly payment on a $100,000 30-year mortgage. On the other hand, even at a 3-percent APR, every $10,000 you don't borrow reduces the payment by about $42 per month.
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