Can LLCs get conventional loans?

Question

I'm new to investing in real estate for rentals.  I have a primary residence and would like to protect it and my family from liabilities.  I would also like to finance my first investment with a conventional loan.

Are there lenders who allow financing using my credit, but own it thru an LLC?  Are there other options?  What are the requirements on the condition or value of the property to get a conventional loan?

Thank you

Account Closed · Answer

I have an LLC, and I simply got a commercial loan for a residential property.  There's a TON of benefits going this route, such as no debt to income ratios that you'll run into as you accumulate properties.

However, you will absolutely NOT be able to get away with 3-5% down like you can with a conventional.  Bare minimum I've seen is 20%, going all the way up to 30% down.

Jon Holdman · Answer

Nope.  Fannie Mae and Freddie Mac's rules don't allow lending to entities.

There are, however, portfolio lenders who will have similar terms and will lend to LLCs.  Terms will be shorter than 30 years, though.  Fifteen or maybe 20 years.

Grant Berthold · Answer

Higher- where I'm at it's roughly 1-1.5% higher

Anthony Dooley · Answer

Depending on the lender, you will still have to personally guarantee the loan.  My lender wants 25% down on a commercial loan, but it was super easy.  I had to fill out a financial statement showing my net worth.

Robert White · Answer

My bank allowed financing through the LLC, with my personal assets as collateral  Therein lies the issue of protecting your home.  The financing was through a business mortgage and a Business Line of Credit.  The LOC had no requirements for the property.  But the business mortgage had profitability requirements based on Cap Rates.  The bank didn't seem to worried about the condition of the property.  They were more concerned with the condition of the business.

Account Closed · Answer

Grant is correct.  It's usually 1-1.5% higher for the rates.

Brian Garrett · Answer

@Devin Jensen Why wouldn't you be able to get another loan through the LLC? There are people with many, many properties.

Devin Jensen · Answer

I currently have an LLC with 5 other people.   The is 100k in the account and we bought a property and hold title in the LLC.  Will we be able to use this LLC to get a loan and buy another property? I'm thinking it will have to be a commercial loan but any suggestions will be appreciated.   Not sure if it matters but be bought the property for 900k and it's worth around 1.8 million now.

Sal Mazzone · Answer

Thanks for responding Tyler!

Can LLCs get conventional loans?

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