Updated about 7 years ago on . Most recent reply
Conventional Loan with Partnership
I've researched this topic in vain so far but am sure the experienced minds at BP have dealt with this before. With conventional loans, the sourcing of down payments seems to be very restricted. This seems to put a kink in plans for a partner that contribute to the down payment. I'm looking at conventional loans because of the preferable amortization schedule and lower interest rates, but maybe I'm simply barking up the wrong tree. This would be for a small MFR which qualifies for conventional.
What is the appropriate way to utilize partnership money in a conventional loan? It can't be considered a gift since that partner would need a vested stake in the property. I know Freddie/Fannie do not permit lending to an entity, so it would have to be pretty creative either way.
If I somehow figured out how to merge my contribution with a partner's contribution to the down payment, how would I get around the DTI restrictions? I would not be able to carry the investment solely with my own finances (hence the partner), so it seems the bank would refuse to lend to me on that basis.
Are partnership investments simply limited to commercial loans only? That's obviously not ideal, but I want to make sure my assumptions are correct when analyzing the deal.
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Another option is perhaps less attractive but if the money is added to your account over a couple of months and for a couple of months, you wouldn’t have to explain where it came from.