Can I still get a qualifying loan in my situation?

Question

I used to have 10 qualifying loans active, but as I have bought more properties, I have refinanced out of those 10 qualifying loans and replace them with commercial loans. As it is now, I only have one qualifying loan (filling one “slot”), but 15 commercial loans. I am under the impression that I could get 9 more qualifying loans other than personal residence loans. I have received differing answers from agents, lenders, and colleagues on this. I can’t tell if this is driven by the total properties I have (more than 10), or if each person is given a slot.

Properties are for new builds in Marion County, FL, for what it is worth. Happy to take referrals.

Properties are for new builds in Marion County, FL, for what it is worth.  Happy to take referrals.

Andrew Garcia · Answer

Hi @Paul Winka, former underwriter here.

Straight from the Fannie Mae Selling Guide:

The following property types are not subject to these limitations, even if the borrower is personally obligated on a mortgage on the property:

• commercial real estate,
• multifamily property consisting of more than four units,
• ownership in a timeshare,
• ownership of a vacant lot (residential or commercial), or
• ownership of a manufactured home on a leasehold estate not titled as real property (chattel lien on the home).

Therefore, it would all depend on whether the properties you currently have are considered commercial real estate.

A lender would have to take a look at the financing documents from the 15 commercial loans to see if they are truly considered commercial loans.

Unfortunately, it is not a cut-and-dry answer but there certainly is a case to be made that those 15 would fall under the "commercial real estate" exemption.

If you would like a referral to a lender, I would be more than happy to provide one. Feel free to shoot me a message so we can exchange information.

Hope this helps! Let me know if I can be of any assistance.

David A Lisowski · Answer

@Paul Winka

Do the commercial loans report on your personal credit?

If they do, they must be included.

If not, you should be good, but you will probably have to provide documentation or additional explanation depending.

One additional caveat: do you report these properties on your personal 1040 Schedule E or are they filed through a business 1065 or 1120?

If you put them on your personal tax return, you *might* have to include them regardless.

Again, nothing is for sure, and each lender (and underwiter) views things differently. Also, there's more to analyze than just a credit report or tax returns, but that's a good start.

Paul Winka · Answer

No lower interest rate for me then! I'll be forced to do commercial. So the lesson here is that there is no reason to get a commercial loan in your own name, and that it is always better to put it in an LLC so one can enjoy having the 10 conventional loans?

Eric Veronica · Answer

As the other folks in this thread have mentioned, you should be good to go with financing additional properties as long as the other properties are titled in the name of the LLC

Trenton Engle · Answer

Hey Paul,

So because all of your properties are under commercial loans except one, you can get 9 more properties as private residential loans. So in short, yes you can!

I'll shoot you a message for any further questions!

Can I still get a qualifying loan in my situation?

Most Popular Reply