Multifam Financing Options When Fannie's Criteria Isnt Met

8 Replies

I'm looking at buying my first rental property and need advice. I have the cash for a down payment and have been told the properties that I'm looking at do not meet Fannie's criteria. They both are in decent shape and cash flow well. One is a fourplex and the other is a duplex with a single family home on the same lot.

What are my options and what would you do if you were in my shoes? If you can break it down "Barney-Style" I would be appreciative!

Hi @Joshua Morgan ,

Why aren't these OK with Fannie? Nothing you listed should be a deal breaker. 

I was told that the purchase price was below their threshold. One property is priced at 64k and the other is at 79k. They also said the location of the property did not line up with Fannie standards. 

@Joshua Morgan - Those deals are on the small side however I have worked cases like those as a commercial broker.  I may be able to help you with options feel free to reach out to me.  

@Joshua Morgan I'm not sure why those properties would need to be non-conforming loans, but there are lenders that can provide those products. Generally there will be a higher down payment and/or rates.

Ah ok. Yeah, no such Fannie rule. But there are new compliance requirements introduced as loan amounts get smaller and smaller. Not really something I'm an expert at, to be honest (SF Bay Area...). 

@Jerry Padilla what can you tell us about the additional requirements that come up with smaller loan amounts? 

@Joshua Morgan did you try the community banks and credit unions?

If the numbers work, they would probably do these kind of deals.

Hi Joshua, 

I am a residential investor loan specialist.  Local banks can be tough - especially if this is your first deal.  Credit and personal income come into to play very heavily.  Fanny and Freddie are even tougher and have limits on total number of loans so that could be a dead end. I can discuss you best options once I know more about your deals. Price, location, s.f., rent roll, expenses are a start. I have some very flexible investors that can get these deals done for you.

@Joshua Morgan

The only issue I see is if there are no supported comps in the area, to support the number of units. They have to have comps to support an assessed value. 

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