How low of a first for 100+% financing?

Question

I'm trying to work a deal for a 4-plex in which I take a little bit of cash back at closing, or at least have financing cover all closing costs and prepaids. Purchase price is $140k, existing mortgage is about $50k. Could I get a lender to give a first mortgage of say 60% LTV ($84k)? This leaves $33k after the existing mortgage payoff. If I can get the seller to hold a second mortgage for $63k that would give him $26k and me $7k at closing.

So my question is, given that the overall financing would be 105%, would a conventional lender grant a 60% first or would it have to be lower, or would they even do it at all? If the seller is fine with their second mortgage and 105% financing, what other sources could I use to get that first mortgage?

Thanks!

Scott Miller · Answer

With all due respect, if you have been financing for 14 years you would realize that you have just advised someone to commit FRAUD.

The silent second needs to be subordinated and transparent to the 1st lien holder or it's FRAUD.

Regards,

Scott Miller

N/A N/A · Answer

Hi,

I have been in residential real estate finance for 14 years and my best answer to your question is that on an investment property you are going to be capped at 90-95% at best on a conventional mortgage.  I would recommend doing an 80% conventional mortgage and do a seller second for the other 20% but I would try to work this out with the seller on the side as the banks will not agree to a seller carryback 2nd on this type of transaction.