I have a question for you. In the example: $200K purchase price, 20% ($40K) down. Say I get a private lender to loan me the $40K for a down payment for the mortgage.
how would a loan officer take this....?
First thing is the person for 40k just giving you the money or do they want to record a position against the property??
Likely they want to record a second mortgage or lien. If you promise to do XYZ and you fail they want recourse generally.
The point that you want to put no money down wouldn't fly with a regular lender. They want the borrower to have skin in the game so when things get tough you have something to lose.
In underwriting the first position lender will want to see seasoning and sourcing of your down payment funds. If you finagle the underwriting to say the funds are yours to do a deal and it's really an undisclosed loan that you have to repay that changes the lenders risk on the first loan. In that case you are committing LOAN FRAUD.
Now if you bought something for 200k and it had an after repair value for 400k with a nice spread in then you might be able to put something like that together with full disclosure and proper structure of course.
No legal advice.
The bank will want to know the source of those funds. If it is a loan that will effect your DTI. You may still be ok, or you may be over the lenders parameters with the additional debt.
is absolutely right. The money has to be seasoned for 60 days in your account prior to application. You are not allowed second mortgages and 100% financing for investment properties.
Your best route would be the private lender and yourself on the mortgage and it becomes a partnership.
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