Bankers, Lenders, and Mortgage Brokers

User Stats

9
Posts
8
Votes
Tim Parker
  • Investor
  • Bremerton, WA
8
Votes |
9
Posts

Duplex lending standards

Tim Parker
  • Investor
  • Bremerton, WA
Posted Sep 28 2022, 11:38

I am financing a duplex. The lender wants top of market rates and will only lend to 60% of appraised value. Is this common?

User Stats

25
Posts
13
Votes
David Lambert
13
Votes |
25
Posts
David Lambert
Replied Sep 28 2022, 11:43

Providing more information will let everyone help you better. What type of loan or you looking at? Where is the property? How does it cashflow?

User Stats

9
Posts
8
Votes
Tim Parker
  • Investor
  • Bremerton, WA
8
Votes |
9
Posts
Tim Parker
  • Investor
  • Bremerton, WA
Replied Sep 28 2022, 11:48

Conventional 15-year loan. The property was purchased with cash. Complete gut. New plumbing, electrical, roof, insulation, the works all done correctly with quality materials. Already rented pending final inspection. Rental income $3400 per month.

User Stats

942
Posts
603
Votes
Rick Albert
  • Real Estate Agent
  • Los Angeles, CA
603
Votes |
942
Posts
Rick Albert
  • Real Estate Agent
  • Los Angeles, CA
Replied Sep 28 2022, 11:49

Typically lenders will take 75% of the appraised income and count that towards your debt to income ratio.

User Stats

313
Posts
170
Votes
Eric Goldman
  • Lender
  • Pennsylvania
170
Votes |
313
Posts
Eric Goldman
  • Lender
  • Pennsylvania
Replied Sep 28 2022, 11:53

less then 6-12m seasoning? small loan amount? credit score?

User Stats

9
Posts
8
Votes
Tim Parker
  • Investor
  • Bremerton, WA
8
Votes |
9
Posts
Tim Parker
  • Investor
  • Bremerton, WA
Replied Sep 28 2022, 11:56

Should appraise for 550-600k. Credit score 770. No seasoning. Loan amount desired 420k.

User Stats

1,136
Posts
1,230
Votes
Robin Simon#1 Private Lending & Conventional Mortgage Advice Contributor
  • Lender
  • Austin, TX
1,230
Votes |
1,136
Posts
Robin Simon#1 Private Lending & Conventional Mortgage Advice Contributor
  • Lender
  • Austin, TX
Replied Sep 28 2022, 12:31
Quote from @Tim Parker:

I am financing a duplex. The lender wants top of market rates and will only lend to 60% of appraised value. Is this common?


No common - you can still get a DSCR loan for this type of property (assuming its non-owner occupied) at 80% of appraised value (fair warning - rates/points will likely be high)

User Stats

25
Posts
13
Votes
David Lambert
13
Votes |
25
Posts
David Lambert
Replied Sep 28 2022, 12:51

It'll probably cashflow a lot better with a 30 year DSCR loan. Rates everywhere have gone up but with your credit score the rates for a DSCR wont be that much higher than a conventional. I have been seeing them for 80% LTV if it cash flows properly at that leverage.

User Stats

439
Posts
238
Votes
Jay Hurst#3 Private Lending & Conventional Mortgage Advice Contributor
  • Lender
  • Dallas, TX
238
Votes |
439
Posts
Jay Hurst#3 Private Lending & Conventional Mortgage Advice Contributor
  • Lender
  • Dallas, TX
Replied Sep 29 2022, 07:04
Quote from @Tim Parker:

Should appraise for 550-600k. Credit score 770. No seasoning. Loan amount desired 420k.

 @Tim Parker When did you buy the property? That can effect what you can borrow on a conventional loan and some DSCR products.

User Stats

9
Posts
8
Votes
Tim Parker
  • Investor
  • Bremerton, WA
8
Votes |
9
Posts
Tim Parker
  • Investor
  • Bremerton, WA
Replied Sep 29 2022, 07:49

11/2020

User Stats

439
Posts
238
Votes
Jay Hurst#3 Private Lending & Conventional Mortgage Advice Contributor
  • Lender
  • Dallas, TX
238
Votes |
439
Posts
Jay Hurst#3 Private Lending & Conventional Mortgage Advice Contributor
  • Lender
  • Dallas, TX
Replied Sep 29 2022, 08:02
Quote from @Tim Parker:

11/2020

 @Tim Parker   Unless the 60% loan to value just happens to be the most your debt to income ratio/DCSR (which ever approach you are using)  can qualify for then that does not make sense.  Any program that I have will lend higher then 60% loan to value on a non-owner occupied duplex.  The exact amount you could go up to would depend on the program but should be more then 60%. 

User Stats

1,074
Posts
859
Votes
Mike Wood
  • Developer
  • New Orleans, LA
859
Votes |
1,074
Posts
Mike Wood
  • Developer
  • New Orleans, LA
Replied Sep 29 2022, 08:45

@Tim Parker It sounds like you are looking to do a cash out refi on a 2 family house that you purchased with cash well over 6 months ago. Most lenders will want to conform with Fannie/Freddie guidelines, which will put the max LTV at 70% for a cash out refi, investor loan. I would say that 60% LTV is low. Having done a few of these exact types of loans (I use 30 year fixed rate loans), I will say that 70% is what I have always got. I would talk to other lenders.

I will say that most of by cash out refi's have had sort of low appraisal valuations.  They appraiser seems to always put a low value on it since there is no sales price of existing mortgage to base the value on (yeah, I know these things are not supposed to affect the number, but it always seem to).

Rates are typically 1-1.5% higher than the normal mortgage rates (due to it being a cash out plus investor loan). Currently if I was doing one, I would expect that the interest rate would be 7-8% for a 30 year loan. This assumes the loan is in your personal name and you dont have DTI or credit issues.

User Stats

4,505
Posts
2,493
Votes
Stephanie P.#5 Multi-Family and Apartment Investing Contributor
  • Washington, DC Mortgage Lender/Broker
2,493
Votes |
4,505
Posts
Stephanie P.#5 Multi-Family and Apartment Investing Contributor
  • Washington, DC Mortgage Lender/Broker
Replied Sep 30 2022, 08:20
Quote from @Tim Parker:

I am financing a duplex. The lender wants top of market rates and will only lend to 60% of appraised value. Is this common?


80% for DSCR is where you should be. Walk away from this particular lender/broker if their max is 60% ltv, UNLESS the rents aren't high enough to get you at least a .75% DSCR. That's really the only explanation for such a low ltv.

User Stats

288
Posts
186
Votes
Lyndsay Zwirlein
  • Lender
186
Votes |
288
Posts
Lyndsay Zwirlein
  • Lender
Replied Sep 30 2022, 09:36
Quote from @Tim Parker:

I am financing a duplex. The lender wants top of market rates and will only lend to 60% of appraised value. Is this common?


 Is it owner occupied or fully investment?