Minimum traditional loan amount?

Adam, For conventional loans, most lenders and brokers will not do a loan for less then $50,000 dollars. With conventional loans, you will need 25% down for lowest points and at least a 680 and preferabley 740 score (to qualify and for less points). Fannie and Freddy purchase/rehab is for single family only and a borrower needs a 720 score.

Edited: 06/26/2010 at 08:32AM

Aly L

Real Estate Investor · Middletown, New Jersey

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Icon_minipost Jun 10 '09, 10:27 AM

I got a $48K conventional mortgage for my first investment property with 20% down through WaMu last year (now Chase). My bank, TD Bank, will also do a loan for less than $50K. I don't know if they require 20% down, but you'll pay PMI if you don't.

Edited: 06/26/2010 at 08:32AM

Eddie Ziv

Real Estate Investor · Studio City, California

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Icon_minipost Jun 10 '09, 10:33 AM

If you meet all the requirement mentioned before you may find some lender willing to lend you as low as $40,000 however, your biggest hurdle will be your DTI (Debt to Income) Ratio.

Edited: 06/26/2010 at 08:32AM

Scott M.

Real Estate Investor · Rochester Hills, Michigan

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Icon_minipost Jun 10 '09, 10:40 AM

When you get to $50K and less does the broker / lo make any cash?

I have had a few deals that clients wanted to do but the lo suggested they would be paying for the loan VS making money

Any truth to that rumor?

Edited: 06/26/2010 at 08:32AM

Alan Brymer

Real Estate Investor · Provo, Utah

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Icon_minipost Jun 10 '09, 11:27 AM

Are you referring to the minimum dollar amount? If so, I'm not sure. I've always thought it was about the % of the purchase price you qualify to borrow.

I've never had the joy of being in a market where houses are $50,000----even 50% off.

Edited: 06/26/2010 at 08:32AM

Josh Green

Banker · Tampa Area, Florida

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Icon_minipost Jun 10 '09, 11:33 AM

spoke to a broker the other day who said he just did a loan for 38k.

Edited: 06/26/2010 at 08:32AM

Adam Anderson

General Contractor · Dallas/Ft. Worth, Texas

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Icon_minipost Jun 11 '09, 12:43 AM

Originally posted by Alan Brymer

Are you referring to the minimum dollar amount? If so, I'm not sure. I've always thought it was about the % of the purchase price you qualify to borrow.

I've never had the joy of being in a market where houses are $50,000----even 50% off.

I am talking about the amount of the loan not the value of the home. As I understand it traditional lenders do not want to lend small amounts because they don't make enough to make it worth it. I thouhg I remember reading $50,000 but I have been unable to find that doing a search of the internet.

Edited: 06/26/2010 at 08:32AM

Mike V.

Real Estate Investor · St. Louis, Missouri

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Icon_minipost Jun 12 '09, 11:08 AM

I just did a conventional 75% LTV with a local bank for a loan amount of 40K. They charged me an extra 1/2 point since the value was under 50K. So yes you can definately do smaller loans but expect to pay a little more for it.

Edited: 06/26/2010 at 08:34AM

Josh Green

Banker · Tampa Area, Florida

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Icon_minipost Jun 12 '09, 11:25 AM

talked to a broker client of mine today and he said he has a place that will do 80% ltv for about 6.5%. he said he has donea loan for 28k with them in the past.

Edited: 06/26/2010 at 08:34AM

Eddie Ziv

Real Estate Investor · Studio City, California

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Icon_minipost Jun 12 '09, 11:37 AM

Hey Josh. Have your mortgage broker dropping me a line (My e-mail address is in my signature) Cause I'm having a hard time getting a loan less then $40,000.
Thanks,

Edited: 06/26/2010 at 08:34AM

Josh Green

Banker · Tampa Area, Florida

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Icon_minipost Jun 12 '09, 11:44 AM

will do eddie. i should be talking to him this weekend....

Edited: 06/26/2010 at 08:34AM

Valerie Pedigo

· Panama (South of Buffalo), New York

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Icon_minipost Jun 12 '09, 12:21 PM

50K is not the minimum loan amount (depends on the program/lender.) There is truth to brokers/loan officers making 0 or paying in on smaller loans. We are paid up-front by points/origination fees (whatever you want to call them) and on the back-end on yield spread by the lender (wholesale dept.) There are add-ons that cut into the yield spread thus cutting the commission. The biggest add-ons are for loan size (i.e. under 50K), non-owner occupied properties, multi units. They are to align with risk. Smaller loan amounts, NOO are not performing well. So, if you have a combination of these, the broker's commissions are cut to almost nothing. The broker can add another point to make something, but then they may face high-cost issues (especially in NY.) That is why you/your clients may get turned down - the broker/lo doesn't want to bother.
I will ALWAYS do these deals, even if I only make a couple of bucks. Why? A little of something is better than a lot of nothing, referral business!, and the average home value here is about 65K.

Hope this helps.

Edited: 06/26/2010 at 08:34AM

Kim Carey

Homeowner · Lansdowne, Pennsylvania

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Icon_minipost Jun 15 '09, 04:39 PM

Hi Josh,
Can you have your broker drop me a line also. I am a newbie and would like to get a mort loan between 25-30k. Don't want to do a personal loan or refi my home and not havimg an option for a mort below 40K is keeping me out of the game:)

Edited: 06/26/2010 at 08:36AM