What to do when you don't qualify for conventional loan?

11 Replies

Hi, team. 

My name is Luke Diamond, and I'm a new real estate investor in Minneapolis, MN. I am attempting to gain pre-approval for a loan on my first multi-family property (first property at all, for that matter).

The amount I have been pre-approved for via Rocket Mortgage is far too small to purchase a multi-family property in my local market. 

I'm a bit discouraged because, as a beginning investor, I was hoping to use basic financing methods (read: conventional loan) to obtain my first property, but that is beginning to seem like it isn't an option. 

Aside from boosting my credit score and bulking my savings -- both of which take time -- I am not sure what other options are available to finance my first purchase before my self-imposed deadline of September 1. 

If the Bigger Pockets community has any advice to offer, I am all ears. Thanks in advance for your pointers. 

Do not call yourself an investor and use rocket mortgage lol

Maybe a refi, but if you're trying to buy a investment find someone who understands what that means. With that said boosting your credit or savings isn't really going to make a huge impact your income is more likely to set your limit. 

If you can't hit the 25% yourself find a partner ... But you're going to need to find a way to market yourself as valuable to that parnter...

An FHA loan should be more flexible with your debt to income ratio and will allow you the lowest possible down payment on multi family property. (2 - 4 units) If you are still running into a wall after that I would look at either seller financing as mentioned above or find a deal so good that friends and family want in on it.

Not sure why nobody has mentioned using a commercial loan.

That's what you should look into if you are unable to qualify for conventional.

Luke, is this a 2-4 or +5 unit property.  That makes a difference in the kind of loan you would look for.  I recommend you contact Tim Swierczek, since he is a lender in your state and can help you assess your options.  

Connect with @Tim Swierczek , he can talk to you about personal loans (FHA, Conventional, ect) and if those are hard to get approved for he can work on a commercial loan for you. He will talk to you about why you won't want to use an FHA loan to purchase your place.