How much will bank let me borrow?

Question

My rental property is a main home (3 bed 2 bath) and an adu (studio of 353 sq. feet).  Combined rent collected is $5300.  I'm wondering how much I can borrow from bank on this rental property?  I believe this home is valued at 875k.

Stephanie P. · Answer

it will be considered a 2 unit and the max ltv is 70% if you're using conventional financing.  If you go portfolio, your rate and fees will be higher, but you'll get an extra 5% in loan to value.

Jerry Padilla · Answer

@Joo Park

Conventional is typically where you will see the lowest rates.

If the property is considered a single family you can get an LTV of 75% and if it is considered a Multi-family you can get an LTV of 70%. It would take into consideration both your income and the rental income to qualify.

Glidden Rivera · Answer

@Joo Park

Most between 70-80%

I have a lender who goes 80%

Joo Park · Answer

This rental unit is fully paid off.  I thought rental income was a factor in pulling money out from a rental instead of a primary home?

Daniella Sanchez · Answer

Shop around and ask several different banks.

Wayne Brooks · Answer

Conventional guidelines on a cash out...70-75% ltv, assuming you qualify.  Rent is irrelevant to the ltv.

Theresa Harris · Answer

@Joo Park  Do you own the property and want to refinance to pull out the equity?  That will depend on how much equity there is in the home.