100% Financing in Massachusetts?

Question

I have a deal near the Greater Boston area. looking to get this deal rehab it and house hack. I ran the numbers with 100% financing and it cash flows! Not sure where to start but looking for lenders, Contractors, Mentors, Partners etc. to connect with and get this deal done!

Charlie MacPherson · Answer

@Shamar Miller If you're going to owner occupy, some towns (none close to Boston though) can qualify for 100% USDA financing.  This link will let you see which towns are eligible:

https://eligibility.sc.egov.usda.gov/eligibility/w...

If anybody on the loan is a US Veteran with a DD-214, they may qualify for a 100% VA loan.

Finally, if the borrower's credit score is 740+, one of the lenders I refer to (Shamrock Financial) has a 100% loan.  Others may as well.

FULL DISCLOSURE - I have no relationship with Shamrock Financial other than sending clients to them. I receive no compensation of any kind from them as it would be a RESPA violation.

David Johnson · Answer

Definitely possible. I actually bought a home with minus 5%. I mortgaged the home and got a cash out. I did it with Brookline Bank, but they no longer do this (they require 3.5% minimum). I also did this on a second property and got 5% back as well. Basically you just have to look harder. There are many situations, for example, pro athletes who suddenly make it big, don't have any cash, and want to buy a home. The traditional mortgage industry trades mortgages between banks so they comply with guidelines so they can commoditize loans. There are some banks which underwrite the mortgage themselves and will evaluate on a case by case basis. Basically in MA housing prices are so high that the government programs are all but useless. However, the upside is that the banks make more money on a mortgage, and equity is easier to assess in a high priced area. For example in the south on a $100K it's basically not worth the banks time. However on a $800K loan if the equity is high (you got it cheap), then they will be more inclined. For example what's the difference between a $1.0M home with 20% down ($800K mortgage 20% equity), and a buying a $1.0M home for $700k with 0 down ($700K mortgage 30% equity)? A bank that is open minded will see the second deal as better. However, expect to pay higher interest rates. In my opinion a few extra points is definitely worth it if you are getting a good return.   In short, look around. Not all banks will want to, probably most want. Realize that the vast majority of websites are trying to sell lots of mortgages so they will tell you it's not possible (notice how they don't allow comments). I'm living proof it is. Twice.

Ted Strzelecki · Answer

I have to say this, and keep in mind I am doing this with the utmost respect and as an experienced investor. If you are doing a multi non owner occupied totally with OPM...you are doing it wrong. Very, very few of these end up long term wins for those that finance 100% in these situations. I am also here in MA, our market has far to wild of swings to go all in. Especially in this far too over inflated pricing index. My point is I caution you to really schedule the numbers if vacancy should increase for an extended period of time.

Dan K. · Answer

Since you what to home hack, stay away from private lenders. If you have income and a decent credit score, obtain a traditional 30 year fixed rate mortgage. A hard money lender would want to see a full payout in a short period of time -- certainly not 30 years!

Here are the FHA loan limits for Norfolk county:

Single        2-family   3-Family    4-Family

NORFOLK

$598,000

$765,550

$925,350

$1,150,000

In your message to me you mentioned changing a 2-family to a 3-4 family. There are many hurdles to clear. The cost of construction in the Boston area is very high. Additionally, there are zoning consideration along with needing two points of egress. In addition, don't forget about the neighbors... Neighbors might oppose a house changing from a 2-family to a 4-family and this opposition could completely sink your plans.

All of this being said, in the Boston area, even if you are feeding your house hack several hundred dollars a month you are doing okay. Don't forget, you are paying rent to yourself. So long as the money that you are paying is below comparable apartments in the area you are ahead of the game and building equity.

You also mentioned that you aren't thrilled with your Realtor. In my opinion, if you aren't 100% comfortable with your Realtor move on to somebody else. I know it feels like you owe the Realtor something since they've spent the time driving you around, showing you places, etc., however that is just part of the job.

Patrick Wheeler · Answer

@Shamar Miller Are you expecting to obtain 100% financing, or just simply using that to run your numbers conservatively? Multifamily? If you want/need to close quickly, start looking at hard money lenders. Can start looking for them on BP here. Then start asking everyone you come in contact with if they have referrals for the other people you are looking for. I found my GC through my hard money lender and its worked out great so far.

Charlie MacPherson · Answer

@Phil Glantz I don't think so, but I have not had a client use that program yet.

My contact is Lisa Larkin.  I'll PM you her contact info.

Phil G. · Answer

@Charlie MacPherson

Hi Charlie-

I'm always looking for 100% financing for clients.  Is Shamrock's 100% financing based on a Home Ready/Home Possible loan with lender contribution towards the 3% down?  I've seen some lenders get it down to 1% with those programs.

100% Financing in Massachusetts?

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