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

Question

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.

Tim Swierczek · Answer

Account Closed  rocket mortgage mortgage is hardly the authority in mortgage lending I’d recommend finding a local professional and get a second opinion.

Harjeet Bhatti · Answer

@Luke Diamond You may have applied online which is not right way for investment property. Try to contact someone in mortgage department who is knoledgable in investment loan.

John Woodrich · Answer

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.

George Griffith · Answer

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.

Brian Garrett · Answer

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.

Josh Engelhart · Answer

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.

Matt K. · Answer

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...

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

Most Popular Reply