I found a 4 unit I would like to offer on but I only have enough cash to put 10% down. I'm having trouble finding financing, and I'm wondering if anyone has ever gone through Quicken and if there is a possibility they'll do 10% down. Or if anyone has experience with any of the other major lenders (lendingtree, sofi, etc.) any feedback would be great!
Mark, Just sent you a request to connect. 10% down on a 4-unit might work if the numbers are compelling and you are able to make the case to the lender. But they would have to be really compelling. It might also work if the purchase price was so low that the LTV ratio made the lender comfortable. You can use the rental property calculator available on BP to analyze and to put together a proposal to the lender. Good luck.
My personal home loan is with Quicken and when I've talked to them about an investment property I'm looking at they ALWAYS say they require 20%. You are probably better off with another lender and I say that LIKING my loan with Quicken :)
Thank you for the replies @Daniel O. and @Hunter Fitch . The numbers are great, so I think if I can just get in front of a potential lender then I have a good chance of getting the financing. I'm not surprised to hear that about Quicken, but I figured it was worth a shot. I've also inquired with SoFi. The offer 10% down "home mortgages" so I wanted to find out if this would translate to an investment property as well. Probably not, but again, it's worth a phone call. I'm still trying to find a local lender, I'm just looking at all options at this point.
You didn't mention the price of the building or if you were going to occupy one of the units. These are important parts of the puzzle, but I'll try to answer as best I can.
First of all, from a conventional-lending standpoint, 4-unit properties are still considered residences. 5 and above units moves you into commercial lending territory. This should be beneficial to you, since it's usually easier (and cheaper) to qualify for conventional-lending (such as Quicken Loans).
Second, if you don't have any other mortgages in your name, it's going to be easier to qualify for owner-financing of this 4-unit property. You will need to sign an affidavit stating that you plan to occupy the property. I'm not familiar with Quicken Loans product lines, but they usually follow conventional (Fannie Mae) and FHA guidelines and lending programs. Therefore, they should have lending programs available to purchase a 4-unit, primary residence with 10% down.
BUT (thirdly), it also depends on the purchase price (and location) of the property (I'm assuming it's NY?). Check with the lending professional in your state to see what the loan limits are.
@John Ching thank you for your reply. The property is listed for about $120k, it is in upstate New York, and I do not plan on living there. I have another mortgage in my name for my two unit. 4 units is as large as I want to go right now just for the reason you stated, it still falls within the residential category.
Most big lenders like Quicken Loans have hard and fast rules with no exceptions. If you are looking for someone to make an "exception" it's going to be from a small community bank.
Not by choice, but I have one loan through Quicken Loans. They bought it from my previous lender. They cold called me 15 times to try to get me to refi when they bought my loan. I repeatedly told them no and they still kept calling. It was weird.
I called them about 5 years later and asked them some basic questions about qualifying for a 3rd property and 3rd mortgage. The people on the phone seemed like aggressive sales people and not knowledgeable lenders. One guy told me that my debt to income ratio was 90%. He added in two mortgages and no rental income. When I asked him how he was doing his calculations, he couldn't give me a straight answer. It was a waste of time.
@Adam Christopher I'm not necessarily looking for an exception, I'm looking for someone who offers that option. I'll be prepared for their phone call now just in case they seem aggressive like you said, but if they only have a 20% option they can't help me anyway.
@Mark Smith You will Not get a 10% down loan on an investment 4 unit property, non owner occupied, period. Also, Quicken is one of the worst choices in the world.....just a bunch of sales type people, with little real knowledge. They only offer what every other institutional lender offers, mostly conventional and FHA loans, and the restrictions are from those agencies. Your best bet is to sit down with a local, knowledgable loan officer, preferably one you get a referral for.
Thanks for the additional knowledge, Mark, but Adam and Wayne beat me to reply!
Adam's experience is pretty spot-on. Unfortunately, those places you see advertising on TV and radio are really filled with 'salesmen/women', who are geared more towards 'selling' you a mortgage product versus actually helping you accomplish your financial goals (like a true mortgage professional should).
He does have a wonderful suggestion which is to try your local, community lender. They might have a mortgage product available that's too exotic for the Wall Street crowd. But don't get your hopes up.
As Wayne B points out, you will not find lender financing on investment property (NOO) with only 10% down. Most private and even hard money lenders have a 75% ltv limit on investment refi's.
I spoke to Quicken this morning so that option is off the table. They said they can do 15% on a single family, 25% on a multi.
I'm going to try to meet with a local lender. I have one in mind, it's just a matter of actually getting to sit down with them. I think if I can buy it for a low enough about, and it appraises for a high enough amount, along with my 10% down, they might bite. It's worth a shot anyway.
Quicken loans is about the worst lender in the country. Highest rates, highest fees,....and with them being based in Detroit, they dont have the expertise to navigate local idiosyncrasies in the underwriting process, and they will write a preapproval for a corpse who has no chance of closing.
@Russell Brazil thank you for your input. Like I said, Quicken is off the table. Hopefully I can find a local lender that will work out!
New York state lending laws will allow you to put less than 20% down on a investment property.
You have to find a lender that is willing to do the deal which usually means you are walking into equity the day you buy the deal putting just 10% down bringing your LTV to 75-80%
Quicken will not do this deal. Trust me. They are to large of a bank to bother with it.
Small community banks and credit unions in the area the investment is located will be willing to lend less than 20-25 %.
Make sure you specifically explain to the banker in detail exactly why you know the deal has existing equity i.e. recent sales comparables and of course the appraisal says it all!
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