Lesson 2 - Credit & Debt Rules for 5% Down

Next: Your credit score.

For a 5% down multifamily loan, you need:

• 580 minimum for 3.5–5% down (FHA or conventional with PMI)

• 620+ for best rates and conventional approval

I got mine from 580 to 620 in 30 days by:

1. Paying off one credit card (from $1,800 → $0)

2. Keeping utilization below 10%

3. Never missing a bill

4. Disputing Errors

Check your score for FREE at CreditKarma.com or Experian.com.

If it’s low? Here’s your 3-step fix:

1. Dispute errors

→ 1 in 5 reports have mistakes.

→ Use the Dispute Template in your bonus PDF.

2. Pay down balances to under 30% of your limit

→ $10,000 limit → max $3,000 balance

→ Pro move: Pay down one card to $0 → biggest score boost

3. Avoid new inquiries

→ No new credit cards, no store cards, no “0% financing”

→ Each hard inquiry = 3–10 point drop

Pro tip: Don’t apply for new credit—lenders hate seeing fresh inquiries. It screams: ‘This person is desperate.’

Action Step #2: Soft pull your credit score TODAY at CreditKarma.com.

Screenshot it. We’re tracking progress.

Now: The rules for 5% down.

This one’s a deal-killer: No new debt during the process.

I had a client, Sarah. She was pre-approved and found a $240K duplex.

Then? She financed a $48,000 car.

Car loan → credit report update → lender email: “LOAN DENIED” New inquiry + new $734/mo payment → DTI jumped past 44% too → DEAD DEAL.

Even though this case is rare - It can happen.

Rules: From pre-approval to closing:

• No car loans

• No credit cards

• No “buy now, pay later” (Klarna, Affirm, Afterpay)

Lenders re-pull your credit 24–48 hours before closing.

They scan your bank statements for large withdrawals.

Action Step #3: Freeze your spending.

Use cash or debit only until you close.

Looking for a 1:1 strategy call to prepare for the purchasing process on a 5% down rental property? Book a 15-minute call today!