Conventional financing with short credit history

9 Replies

Hi All,

I've been in the states for about 3 years now, but have only really built up about a year and a half worth of credit. My credit score itself is excellent, and everything else, job history, income, reserves etc are A+, but because the history is so limited, the underwriters are unwilling to book my refinance loan at the moment.

I understand that if I was asking for a loan for a conventional owner occupier it's easier, but apparently they are more picky with investment properties.

Short of waiting for another year or two to build up some history, what are my options? 

You can probably find private money sources in your area.

The problem with private money sources is that they tend to be quite high interest rates and many properties won't cash flow with high rates. I did speak with a few people about this and I've found a few ways out which I'm investigating

* You can adjust your credit history with additional trade lines.

* I've heard there are other lenders who will provide short term loans that are amortized over 30yrs, but due in a shorter period of time with a big balloon payment.  So that would buy you the time required to build up a credit history.

Hi @James De Silva 

I don't see why you couldn't get approved at this point. You may just need to look at an investor friendly lender.

@James De Silva

 Are you implying by "refinance" that you already have a loan on the property or did you purchase it all cash? Generally, if you have high scores and established trade lines, then you should be able to get financing.  Usually the income has to be at least 2 years. 

@Jeff Trevarthen

I purchased it all cash. I have high scores (730+), but my tradelines are only a year and a half old. My primary source of income is my job and I've been there for a long time.

Have you thought about partnering with someone who has more established credit?

@James De Silva

I have a couple questions...

  • What type of property is it?
  • What's the value? 
  • Is it being leased at the moment?
  • What's the current rate and balance on the loan?

@Copelon Kirklin

 It's a duplex, worth about 95k, both units fully leased. It was a cash deal so there is no loan on it...

@James De Silva

Gotcha. Now I see where the difficulty lies. The current value of the property would make for a low loan amount. It's hard to get loans from banks for these low amounts. At that point, the low interest rates are gone. Your next option would be private money, which as you already know, is more expensive.

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