Can’t get investment loan without owning a house?

13 Replies

My wife and I rent in the LA area and entertained the idea of buying a house (laugh track ensues). We connected with an agent and are in the middle of a pre-approval process with a mortgage officer. Today, I let him know our goals are to invest in multifamily homes in the Midwest whatever and asked if getting pre-approved for a home for us would hurt our credit or chances to get pre-approved for rental properties.

So now he’s saying it won’t, but banks won’t approve us for an investment loan unless we already own a house. That sounds like a load of rubbish to me. Is he right? Owning a house in LA is immensely costly and I think we’d rather spend our downpayment cash on something that cash flows.

Tl;dr: loan officer handling our pre-approval application for a house in LA says we won’t get an investment loan until we buy our own house.

Originally posted by @Eric Ippolito :

My wife and I rent in the LA area and entertained the idea of buying a house (laugh track ensues). We connected with an agent and are in the middle of a pre-approval process with a mortgage officer. Today, I let him know our goals are to invest in multifamily homes in the Midwest whatever and asked if getting pre-approved for a home for us would hurt our credit or chances to get pre-approved for rental properties.

So now he’s saying it won’t, but banks won’t approve us for an investment loan unless we already own a house. That sounds like a load of rubbish to me. Is he right? Owning a house in LA is immensely costly and I think we’d rather spend our downpayment cash on something that cash flows.

Tl;dr: loan officer handling our pre-approval application for a house in LA says we won’t get an investment loan until we buy our own house.

This is 100% false.  It sounds like your loan officer has no clue! 

Totally incorrect.....he likely isn’t that dumb, he just realizes he can’t write a loan in the Midwest and would make no commission on that, unlike if you bought a house locally.

Well it also depends on 2 major factors.  The type of lender /loan and the type of property.  Most portfolio lenders want you to own your primary residence because they cannot lend to owner occupied properties and with you not owning your primary it's seen as a risk.  However if your first property is, let's say a mixed use or 3-4 units you have a better chances with a portfolio lender.  Lenders who offer conventional loans are a different game all together. 

That is complete BS!!! Loan officer is a typical scam scum that is coercing you into purchasing a SFR and not continue to rent. I rent my townhouse and own 6 multi family homes...just saying

It true!  You can't get a loan for an investment property unless you own a home. But wait a minute, I've bought several and I don't own a primary home because I buy long distance from overseas where my wife and I direct a large international service project.  Imagine that!  I don't own a primary and I live overseas and therefore I must be disqualified.  Sorry to sound facetious. Just wanted to have a laugh. Find another lender!

@Matthew McNeil

What most investors don't realize is that in banks / CUs loan officers are not able to provide you with every loan product the bank offers. What the loan officer was likely really saying was that THIER bank requires you to own your home to qualify for the loans that THIS LOAN OFFICER can provide. Who knows why they left this info out. This type of misinformation happens very often. They could have been uneducated about other options or maybe the loan officer they refer those loans to ate all of their Oreos that were in the break room while they were on vacation!! It's hard to tell. Moral of the story is ask at least 3-5 loan officers at different banks before you accept a turn down like this.