Minimum traditional loan amount?

Question

What is the minimum that you can normaly get financing for? $50,000 keeps poping in my head I have been unable to find any verification.

Valerie Pedigo · Answer

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.

Joel Soforenko · Answer

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.

Kim Carey · Answer

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:)

Josh Green · Answer

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.

Mike V. · Answer

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.

Josh Green · Answer

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

Eddie Ziv · Answer

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,

Adam Anderson · Answer

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.

Josh Green · Answer

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

Alan Brymer · Answer

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.

Minimum traditional loan amount?

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