Can I get two loans around same time?

Question

Hi guys so I'm new to real estate Investing and I have a few questions. I want to know can I get 2 different types of loans around the same time? I was looking at a 4 plex for an FHA loan and a and a apartment complex 8 units for a dscr loan. Can I do both?

Account Closed · Answer

Your Comment: "I wouldn't disclose anything:"That's very bad advice. Did you know the lender can also be charged as being complicit? It's true.

The question is "What properties do you own and what debts do you have". It isn't "what properties and debts show up on your credit report". They already have that information. They want to know what you haven't told them and they deserve to know, since it's their money at risk.

Be careful out there.

Stephanie P. · Answer

@Nessa Lyn

I wanted to go a little deeper for you on why I said to go with the FHA loan first.

Underwriters who do conventional or FHA underwriting will pull what's called a "drive report".  The drive report is like a background check and if you've bought anything using a DSCR loan, whether it's under and LLC or not, the drive report MAY find it and you'll have to disclose the purchase of the 8 unit and subsequently qualify using the debt without the benefit of the income and, depending on your circumstances, could grenade your chances of getting the FHA property.  DSCR lenders do not report to your credit report, but I've seen numerous conventional purchases blow up because other properties popped up on the drive report and because the purchases weren't seasoned enough to show up on taxes, the debt ratio was out of whack.

Structuring your purchases is very important and you have to take the necessary steps to be successful.  A good mortgage broker can walk you through it.

Stephanie

David M. · Answer

@Nessa Lyn

You can... But I think you need to make sure you tell the FHA lender what you are doing.  I assume the dscr loan will show up in your credit report so if that hits, it will throw off your dti calcs for the FHA.  If anything to be safe, I'd close on the FHA first and then a few days or more later close on the 8unit since the dscr shouldn't care...

Nessa Lyn · Answer

yes, I had no intention of lying about either loan. Just wanted to know; One, if it was possible, and Two, the best way to go about it if so.

Ronald Rohde · Answer

I'd disclose both, but its possible.

Account Closed · Answer

This response was not necessarily intended toward you specifically. A lot of people read these responses, but they never comment.

My responses are almost always oriented toward people who have the same question so I try to make it general enough to be useful to them as well in the future.

Someone, not you, stated "I wouldn't disclose anything" and that is very bad advice and I just wanted to make sure no one fell into that trap unwittingly.

In a lawsuit, a good attorney would point out that the borrower didn't disclose and that would go badly for them with the judge and jury. There actually is a duty to disclose if the borrower fills out a standard 1003 loan application form. That can and will be used against a borrower in an investigation. The results can be mortgage fraud, wire fraud, theft and so on. In my opinion you want to avoid that at all costs. It just isn't worth the risk.

"Mortgage fraud prosecution has increased in recent years due to low interest rates on home mortgages which make purchasing homes easier and more attractive, and as the housing market grows, we can expect even more mortgage fraud cases to be brought. One can only imagine what will happen if and when the housing market bursts and banks attempt to initiate foreclosures and recoup what they claim are losses.

Fraud is defined as a "knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment.

Account Closed · Answer

Back when the earth was cooling and I was a loan originator, the questions asked for FHA loans was something like "what properties do you own" and what debts do you have. That's because FHA is backed by the US Government (those of us who pay taxes). They want to know what your Debt to Income Ratio is and what risk they are taking on by lending you money.

I'd close on the FHA loan then I'd look into other loans. Because, lying on a federal loan application is a felony, not to put too fine a point on it. So, always disclose the truth. Just do things in order and you will be fine.

Nessa Lyn · Answer

Thanks for clarifying Stephanie. I'm currently looking into finding the perfect mortgage broker and learning more about how to structure my business planning in real estate.

Simmy Ahluwalia · Answer

You certainly can.  I wouldn't disclose anything, as it's not required.  Obtain a DSCR loan on the 8-unit, close in your LLC, and this loan will NOT report to the credit bureaus nor impact your personal DTI.  Investors do this all of the time, sometimes they secure traditional funding (FHA, Fannie, Freddie, etc...), and then they mix it up with private DSCR loans.

Stephanie P. · Answer

Understand that you'll need to qualify for both loans with the FHA lender and the property will have to meet the self-sustainability test, and you will not be able to offset the rents from the 8 unit with any income.  Buy the FHA property first and then do the DSCR loan.  Otherwise, you may not qualify for the owner occupied one.

Can I get two loans around same time?

Most Popular Reply