Is there a minimum for conventional loan (investment property)?

4 Replies

is there a minimum loan the banks will do?
say there is a rental property for sale at 30k. if possible, i'd like to go with 25% down and finance 22.5k .
is it something the banks will consider?

I don't know about the big banks, but I imagine most small local banks would have no problem doing this. I just got a loan for another rental from a local bank for 27k. Closing was quick and painless.

Most of your bigger banks and mortgage brokers have a $50k minimum, chase, b of a, and companies like countrywide and such, local banks and credit unions will normally loan basically any amount, I've done as little as $15k, but you still pay similar fees, orignation cost, and surveys, apprasials, and such fees that are generally the same cost if they loan $10k or $100k, so there becomes a point when imo its not worth going through the bank, as the upfront cost are too great for the property, i.e. $2000 to get into a $20k house, at 7%, or you can do a hard/private money or similar loan and pay 12%: but have less requirements to obtain the loan, that 5% doesnt make that much of a difference in payment.
20k 7% 30yr payment $133.06/mo
20k 12% 30yr payment $205.72
While that may be $70 a month, if your orignation cost are $2000 greater it would take you 2.5 years of paying that higher payment to become even, if you wanna keep it for 30 years pay for the rate, if your unsure your longterm plans, pay the higher rate and keep your bank loans open for higher priced properties you may come across, it sucks to have your conventional loans all tied up with small $20k loans
Hml also close ways faster, giving you a buying advantage.
Now a days with banks being so strict on the number of loans they will make and such it really sucks.tieing up one your money "lifelines" for a 20k loan.
And with 25% down I'd think most private money guys would be all over that, get a deal at even 10% off retail, put 25% down, should be within most of there guidelines.
Little off topic but something to consiter before using banks for smaller loans!

Originally posted by Scott R.:
Most of your bigger banks and mortgage brokers have a $50k minimum, chase, b of a, and companies like countrywide and such, local banks and credit unions will normally loan basically any amount, I've done as little as $15k, but you still pay similar fees, orignation cost, and surveys, apprasials, and such fees that are generally the same cost if they loan $10k or $100k, so there becomes a point when imo its not worth going through the bank, as the upfront cost are too great for the property, i.e. $2000 to get into a $20k house, at 7%, or you can do a hard/private money or similar loan and pay 12%: but have less requirements to obtain the loan, that 5% doesnt make that much of a difference in payment.
20k 7% 30yr payment $133.06/mo
20k 12% 30yr payment $205.72
While that may be $70 a month, if your orignation cost are $2000 greater it would take you 2.5 years of paying that higher payment to become even, if you wanna keep it for 30 years pay for the rate, if your unsure your longterm plans, pay the higher rate and keep your bank loans open for higher priced properties you may come across, it sucks to have your conventional loans all tied up with small $20k loans
Hml also close ways faster, giving you a buying advantage.
Now a days with banks being so strict on the number of loans they will make and such it really sucks.tieing up one your money "lifelines" for a 20k loan.
And with 25% down I'd think most private money guys would be all over that, get a deal at even 10% off retail, put 25% down, should be within most of there guidelines.
Little off topic but something to consiter before using banks for smaller loans!

Makes perfect sense, thanks!!!

My local credit union is doing a 21k loan for me for 15 (could've done 30) years 5% (3 year demand/ARM) with 25% down. Not too worried about interest rates going up as it's only 21k. The CU also told me, when I inquired about the number of loans I could take, that that wasn't an issue--I simply couldn't exceed 5% of the CU's worth. Down money is my only limitation--as well as doing only one deal at a time.

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