Lender will not approve purchase due to the price is too low

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Lender will not approve purchase due to the price is too low

Hector Lewis
Member since 2019 · 37 posts · 7 votes

Hello,

I found a multi family property that is under $100k. I am already approved for $130k. When I told my lender about the property, they stated they could not finance if it is under $100k.

Does anyone have any suggestions for trying to get this property financed?

Thank you.

2Reply
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Mark MunsonBusiness Member
Lender · Orlando, FL · Member since 2022 · 440 posts · 300 votes
3y

Hi @Hector Lewis

How many units is the property? A lot of DSCR lenders should be able to help, as minimum loan amounts go down to $50k with some lenders. They may have a "Per Door" value, so that is why I asked about how many units. I'd be happy to connect to see if I can help or give you some recommendations. Feel free to reach out.

[email protected]407-900-8799
CapSource LLC4.947 Reviews
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  • Mark MunsonBusiness Member
    Lender · Orlando, FL · Member since 2022 · 440 posts · 300 votes
    3y

    Hi @Hector Lewis

    How many units is the property? A lot of DSCR lenders should be able to help, as minimum loan amounts go down to $50k with some lenders. They may have a "Per Door" value, so that is why I asked about how many units. I'd be happy to connect to see if I can help or give you some recommendations. Feel free to reach out.

    [email protected]407-900-8799
    CapSource LLC4.947 Reviews
    WebsiteView Page
    1Reply
  • Hector Lewis
    OP
    Member since 2019 · 37 posts · 7 votes
    3y

    @Mark Munson

    Hi Mark,

    Thank you for responding. This is a duplex in New York for $72k. If you have some recommendations, that would be great.

    Thanks,

    Hector

    0Reply
  • Brittany MinocchiBusiness Member
    Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
    3y

    Conventional or nonQM? If nonQM, most lenders have a $100k loan amount minimum. I've seen some that go down to $55k-$75k depending on the scenario. Conventional should be a bit easier to finance with a low (sub $100k) loan amount. 

    [email protected]330-354-6590
    Brittany Minocchi - Barrett Financial Group, LLC522 Reviews
    View Page
    1Reply
  • Trevor Schmitt
    Rental Property Investor · Fargo, ND · Member since 2017 · 129 posts · 107 votes
    3y
    Quote from @Hector Lewis:

    Hello,

    I found a multi family property that is under $100k. I am already approved for $130k. When I told my lender about the property, they stated they could not finance if it is under $100k.

    Does anyone have any suggestions for trying to get this property financed?

    Thank you.

    Hi Hector, great job finding a potential property! 

    Start talking to other lenders, plain and simple... you preapproval does not hold you obligated to anything. Talk with local banks, regional banks, credit unions, mortgage brokers, etc... keep having conversations with lenders until someone is willing/able and excited to help you through this exciting journey! 
    1Reply
  • Ana Kehoe
    Lender · Member since 2023 · 10 posts · 2 votes
    3y

    Hello! Most of the lenders have a minimum of 50k per door and 100k minimum of as-is value limit for rental purchase. However, you can inquire about a non-DSCR or commercial loan with the higher rate, but 50k minimum loan amount. If property needs a light rehab, fix & flip loan will be a good way to acquire this property since the loan minimum is also 50k.

    1Reply
  • Nick Rutkowski
    Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
    3y

    @Hector Lewis

    What kind of lender did you use and have you tried the local credit union? I was able to buy a 4 unit for 75k through my credit union in Upstate NY

    1Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    3y

    If you have a primary maybe a HELOC? Do you have a significant down payment? Maybe seller would finance if you put down $15k (20%) and a 5 year mortgage? ($1,000/mo plus interest). A friend/relative that has either cash or equity that would lend it to for 6-8%?

    0Reply
  • Hector Lewis
    OP
    Member since 2019 · 37 posts · 7 votes
    3y

    @Brittany Minocchi 

    Conventional or nonQM? If nonQM, most lenders have a $100k loan amount minimum. I've seen some that go down to $55k-$75k depending on the scenario. Conventional should be a bit easier to finance with a low (sub $100k) loan amount.

    Thank you for your response.  This is a conventional loan where I was going to put down 25% but they stated they would not finance since it was under $100k.

    0Reply
  • Hector Lewis
    OP
    Member since 2019 · 37 posts · 7 votes
    3y
    Quote from @Trevor Schmitt:
    Quote from @Hector Lewis:

    Hello,

    I found a multi family property that is under $100k. I am already approved for $130k. When I told my lender about the property, they stated they could not finance if it is under $100k.

    Does anyone have any suggestions for trying to get this property financed?

    Thank you.

    Hi Hector, great job finding a potential property! 

    Start talking to other lenders, plain and simple... you preapproval does not hold you obligated to anything. Talk with local banks, regional banks, credit unions, mortgage brokers, etc... keep having conversations with lenders until someone is willing/able and excited to help you through this exciting journey! 

     Thank you for the idea.  I will reach out to local bank and credit unions.

    0Reply
  • Brittany MinocchiBusiness Member
    Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes
    3y
    Quote from @Hector Lewis:

    @Brittany Minocchi 

    Conventional or nonQM? If nonQM, most lenders have a $100k loan amount minimum. I've seen some that go down to $55k-$75k depending on the scenario. Conventional should be a bit easier to finance with a low (sub $100k) loan amount.

    Thank you for your response.  This is a conventional loan where I was going to put down 25% but they stated they would not finance since it was under $100k.

    Ah, gotcha. Different banks have different requirements. Lower loan amounts are common here in the Midwest…~$50k loans aren’t unheard of, just depends on the whole scenario on whether or not it makes sense to do
    [email protected]330-354-6590
    Brittany Minocchi - Barrett Financial Group, LLC522 Reviews
    View Page
    0Reply
  • Hector Lewis
    OP
    Member since 2019 · 37 posts · 7 votes
    3y
    Quote from @Ana Kehoe:

    Hello! Most of the lenders have a minimum of 50k per door and 100k minimum of as-is value limit for rental purchase. However, you can inquire about a non-DSCR or commercial loan with the higher rate, but 50k minimum loan amount. If property needs a light rehab, fix & flip loan will be a good way to acquire this property since the loan minimum is also 50k.


     Hi Ana,

    Thank you responding.  The property I am looking at is under 100k.  Thank you for the information.

    0Reply
  • Hector Lewis
    OP
    Member since 2019 · 37 posts · 7 votes
    3y
    Quote from @Nick Rutkowski:

    @Hector Lewis

    What kind of lender did you use and have you tried the local credit union? I was able to buy a 4 unit for 75k through my credit union in Upstate NY


     Hi Nick,

    I went through Rocket Mortgage.  I am going to go check on the local credit unions.

    Thanks,

    Hector

    0Reply
  • Dennis Muno
    Lender · Denton, TX · Member since 2023 · 349 posts · 80 votes
    3y
    Quote from @Hector Lewis:

    Hello,

    I found a multi family property that is under $100k. I am already approved for $130k. When I told my lender about the property, they stated they could not finance if it is under $100k.

    Does anyone have any suggestions for trying to get this property financed?

    Thank you.

    Hello Hector, while low purchase price(resulting in low loans) may be a problem, there may be a few local/ national lenders that may be willing to help you. It'd be an issue of finding them. Keep in mind, some lenders may be willing to do this but maybe not in an LLC. Your rate may be slightly higher too because from a lender perspective low loan amounts under 100K could be a little risky especially if it happens that they have to foreclose on.

    0Reply
  • Matt Miller
    Lender · Charlotte, NC · Member since 2023 · 16 posts · 8 votes
    3y

    Hey @Hector Lewis,

    I have a DSCR but it also starts at a $75k minimum loan amount.
    typically I advise folks that are coming a little less to do a fix & flip, then DSCR cash out at $75k. That way you can acquire, renovate, and either sell off or rent. 
    the fix & flip is a 90% ltv + 100% renovation. 

    ex. pp: $72k 

    Loan 90%ltv: $64,800 + $11k reno= $75,800- that's the minimum loan amount met and we can close. Then you can refinance at $75k in 3 months as long as the ARV is $108k+

    0Reply
  • Hector Lewis
    OP
    Member since 2019 · 37 posts · 7 votes
    3y
    Quote from @Matt Miller:

    Hey @Hector Lewis,

    I have a DSCR but it also starts at a $75k minimum loan amount.
    typically I advise folks that are coming a little less to do a fix & flip, then DSCR cash out at $75k. That way you can acquire, renovate, and either sell off or rent. 
    the fix & flip is a 90% ltv + 100% renovation. 

    ex. pp: $72k 

    Loan 90%ltv: $64,800 + $11k reno= $75,800- that's the minimum loan amount met and we can close. Then you can refinance at $75k in 3 months as long as the ARV is $108k+


     Hi Matt,

    Thank you for the information.  This was really helpful.

    0Reply
  • Hector Lewis
    OP
    Member since 2019 · 37 posts · 7 votes
    3y
    Quote from @Dennis Muno:
    Quote from @Hector Lewis:

    Hello,

    I found a multi family property that is under $100k. I am already approved for $130k. When I told my lender about the property, they stated they could not finance if it is under $100k.

    Does anyone have any suggestions for trying to get this property financed?

    Thank you.

    Hello Hector, while low purchase price(resulting in low loans) may be a problem, there may be a few local/ national lenders that may be willing to help you. It'd be an issue of finding them. Keep in mind, some lenders may be willing to do this but maybe not in an LLC. Your rate may be slightly higher too because from a lender perspective low loan amounts under 100K could be a little risky especially if it happens that they have to foreclose on.


     Hi Dennis,

    Thank you for the information.  I ended up finding a local lender and I am good to go.

    0Reply
  • Chad Chung
    Member since 2024 · 3 posts · 0 votes
    2y
    Quote from @Hector Lewis:

    @Mark Munson did you find a lender?

    0Reply
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