Fannie Mae Cash Out LTV and Seasoning

11 Replies

Does anyone have a suggestion how to get around the Fannie Mae 6 month seasoning and 70% LTV requirements for cash out refinance on multi-fam? I have a duplex that am trying to follow BRRRR strategy but running into this lending rule hurdle for a conventional refi for the long term hold. I used a hard money loan with 70% ARV to fund the purchase and rehab. I was hoping to get to 75% LTV from cash out refi after the 2.5 month rehab.

@Stephen Stokes , Technically a duplex is not a multifamily property, that may help with your research in the future, but I don't think that it made a difference this time.  There is typically a minimum of a 6 month seasoning period.  This does start with the initial acquisition which is always a plus.

Loan Originator from Cardinal Financial just told me over the phone they can do it but will see what they actually come back with. Have done a loan with them before and it was not conforming so hopefully not TGTBT. 

Originally posted by @Stephen Stokes :

@Harjeet Bhatti where there is a will there is a way. 

 It will not be Agency money, so you will be giving up 1 or 2 of the following:

- Fixed rate.

- Attractive rate.

- No/Low points upfront.

- 30 yr am.

If you can identify which 1 or 2 you want to give up, and can be crystal clear when Dialing for Dollars, it'll likely save you a bunch of time.

@Greg Downey

How is a 2 unit property "not a multi-family property" particularly as it pertains to Fannie Mae?  The eligibility matrix shows a distinction between 1, 2 and 3-4 units right?  What am I missing?

@Stephen Stokes

Yes, where there's a will, there's a way and the way to come in under the seasoning requirement is to use private lenders or non-agency money that will undoubtedly be more expensive in both the short run and long run.  If you can't qualify for conforming money,that's one thing, but if you're just worried about the carrying costs for an extra couple of months, my suggestion would be just wait and eat the short term costs.  You're going to pay one way or the other, but by taking long term non-agency money before you've exhausted your conventional options is going to cost a lot more.  The rates and fees for a 30 year fixed over a short period of time will by far eclipse what you can get with conforming money.

Hope that helps you clarify.

Stay safe down there in Texas


@Stephanie P. , You didn't miss anything.  I was unnecessarily and not very clearly drawing a distinction between 1-4 unit Single Family Dwelling vs. 5+unit "multi-family" financing.  Like I said, unnecessary and not clear, my apologies.  

Thanks @Stephanie P. my main issue was having to go through 2x refinances due to seasoning requirements and the LTV @ 70% means I have to keep more capital tied up than I would like in the property. Carrying cost is high; for 4 extra months would cost me almost $10K if I stick with the HML until 6 month seasoning is covered.

@Greg Downey

No apology necessary.  You're actually correct.  I haven't thought about the distinction between residential units vs. commercial units in a while.