Banks views on private money

[Mark Lynch]

I was talking to mortgage company loan officer and I mentioned that I would be getting a private money loan from a friend for an investment property I’m looking to buy. She said that the bank will generally frown upon that and question about where the money came from. My question is, I know that investors use private money all the time. So, do you guys run into issues trying to financing using other peoples money. Or does private money usually just go to buying a property outright.

My income is sufficient for the loan I want to get and my credit is fine. It just seems to be the issue of the down payment money I’d be using.

What can I do differently??

Thanks in advance

[Stephen Akindona]

@Mark Lynch, banks will typically not let you borrow from other sources to fund down payments, and typically your private money or hard money lenders don't want to be in a second position on the loan. You can borrow the money for down payments but usually have to structure the deal as a partnership and not as outside debt. Also depends on the type of loan residential loans are a little more restrictive, typically speaking then commercial loans.