Financing a fifth mortgage

3 Replies

im new to bp and would like some advice on options to buy a house.

I have five properties in the Dayton/cincy area and all properties are rentals.  I recently obtained a personal 5yr loan @3% and decided to pay off one of the properties.  I still have four active mortgages.

I will be away for military training for about 6 months and then move back to the Dayton area. I am looking to buy another property as my primary residence. I'm considering either a second VA loan or a conventional loan.

I've spoke with the banks before and they have told me I need 6 months piti for any properties I had.  I believe it's only 3 months for a va loan unless it's multifamily (I have one duplex).  Will a bank count my paid off property as an asset for this?

Do you think I will have to have more than 5% down payment if I could do a conventional loan?  I bought a primary residence earlier this year and shortly after moved out of state for a job (currently renting).  Do you think a bank will hold this against me?  Should I only talk with portfolio lenders?  I plan on inquiring with some banks when it's getting closer to the time for me to move back to the Dayton area.  Any advice would be greatly appreciated.

David

@David Long  Thank you for your service.

Lots of questions and scenarios in your case. I will give you some general guidelines, as I don't know the details about your mortgages.
* Per Fannie Mae guidelines, an individual can have up to 10 mortgages in their name. So you are fine on that end. Once you go into 5+, the ratios are higher and reserves more.
* Depending on when and where you used your VA benefit, you might be able to get a 2nd VA loan. It will all depend on the chronology of events and location of the property with the 1st VA loan.
* From your description, it looks like you have more then 2yr landlord experience. So 75% the rent you receive will be counted towards your DTI. This includes the paid off rental.
* With regards to the primary residence you bought, which you rented shortly after, the bank will want to see the chronology of events and circumstance. Generally speaking, banks do not like it. But if there is a valid reason, then you should be fine.

Based on what you have stated, you should be able to find a bank that will work with you. You should not need to go the route of portfolio lender.

Upen Patel, Mortgage Banker
VA, FHA, Investor Loan Specialist
National Lender, Federal NMLS# 1374243

You have the advice (above) from the lender side, and here is from the borrower side.  

We recently bought a rental with a fifth mortgage and there were a lot of hoops to jump through, in terms of paperwork and tracing the pathway of funds, plus information on our current rentals. The lender asked for a number of "Memo of Explanation" requests to explain why we had such-and-such occur in our financial situation.  We have been renting our current batch of properties since 2012, so have a track record that allows the bank to count the rental income, as you seem to.  

The bank did want to see a large amount of reserves, but they allowed us to use retirement funds to fulfill the requirement.  The down payment we could have opted to get a second mortgage, according to the agent, but we opted for 25% down as we are happy for extra cash flow.  Immediately, the agent who originated the loan sold it off to Flagstar.  

It can be done in this present market.