Airbnb financing- mortgage broker or local bank?

11 Replies

Hi everyone, looking for some good advice on obtaining a mortgage for an Airbnb property.. is it smarter to go with a recommended mortgage broker or stick with your local bank that you worked with for a few years (15) that you have a good relationship with? Wise advice is much appreciated! Thank you!

If you seek a non owner occupied conventional loan sold to GSE you need a mortgage banker who can sell to either Fannie or Freddie, or a private source if your profile can't fit the GSE box, or something else...  The person at a bank has one option.

Originally posted by @Caroline Gerardo :

If you seek a non owner occupied conventional loan sold to GSE you need a mortgage banker who can sell to either Fannie or Freddie, or a private source if your profile can't fit the GSE box, or something else...  The person at a bank has one option.

 No offense meant Caroline, but what you said didn't make sense.

You can get a non owner occupied loan from a bank, retail mortgage lender, specialty mortgage lender, mortgage broker, or credit union.  They all work with loans securitized by the GSEs (Fannie, Freddie, Ginnie), but few work with loans outside that box.  Being able to sell to the secondary market (Fannie, Freddie or Ginnie) doesn't make any lender special, it's pretty normal.  Though you're right about the person at the bank having only one option.  

Banks are the lazy person's choice for a mortgage.  You want to go sit with a person who knows less about mortgages than you then go to a bank.  You want to have a single option with rates for captive customers not willing to shop around, then go to a bank.  You want someone who does everything including the kitchen sink then go to a bank.  You want a specialist then pick a specialist.

A broker works with many lenders.  They work with lenders that also have retail branches but they can take your loan somewhere else if it makes sense to do so.  

Originally posted by @Justin P. :

Hi everyone, looking for some good advice on obtaining a mortgage for an Airbnb property.. is it smarter to go with a recommended mortgage broker or stick with your local bank that you worked with for a few years (15) that you have a good relationship with? Wise advice is much appreciated! Thank you!

If you have a relationship with the bank and they can do the loan you're asking for within the parameters of a STR, then why not use them? That only makes sense to me, particularly if you know what you're looking for and they can provide the solution. If you go to a mortgage broker and they can do whatever you're asking for or if it's better than the bank, ask the bank if they can do that and if they can, stick with the bank. If not, then go with the broker and use the bank on the next one.

Fannie and Freddie are not purchasing loans from all lenders as of April 2021. The cost to refinance an investment property jumped as lenders have to either hold the loan or sell to other sources.  A bank only sells to Freddie OR Fannie thus making them more limited.                  

Hey @Justin P. ,

Is the property non- owner-occupied? I see a lot of people saying this in the thread but don't see that you have mentioned it. Honestly, it really depends on what type of terms and lending experience you're looking for. With your banks, you're going to have to walk through a lot more red tape (you should keep it in mind especially being that this is an STR property). Also, you have more options than just a mortgage broker and your local bank. As mentioned before you can get a mortgage from a bank, retail mortgage lender, specialty mortgage lender, mortgage broker, credit union, and alternative lender.

I'm also curious, in general, about your portfolio.

@Ryan Herting

Yes Ryan, the property will be non-owner occupied (entire home rental).. Very small portfolio at this point..one rental property (single-family home) that has some acreage available for future development in the middle of town, another parcel right on the edge of another town of 17,000 people prime for development.. not a big dog yet😅 

@Stephanie P.

Thanks! So I have spoken with a mortgage broker and also my local bank (which has a mortgage broker internally). Definitely a lot better options as far as interest-rate with my bank rather than a standalone mortgage broker… they both estimate I will need to put around 25% down though.. I can do that, but I guess there’s not a better way around the 25% down other than going with a partner? At this point I have the cash on hand so with rapid inflation happening I feel it’s better to get rid of cash on hand rather than stack it… of course not totally depleting yourself of cash but the dollar becoming of less value is very concerning. Thanks for your advice!

@Daniel Hennek

True that..And that is exactly what I have found in discussions with them, although, my bank does have a mortgage broker internally and she does have a couple options with investors no not as many as The mortgage broker did. In my case though, as of yesterday, my local bank mortgage broker was able to offer me a far better deal then a highly recommended mortgage broker.

Originally posted by @Justin P. :

@Stephanie P.

Thanks! So I have spoken with a mortgage broker and also my local bank (which has a mortgage broker internally). Definitely a lot better options as far as interest-rate with my bank rather than a standalone mortgage broker… they both estimate I will need to put around 25% down though.. I can do that, but I guess there’s not a better way around the 25% down other than going with a partner? At this point I have the cash on hand so with rapid inflation happening I feel it’s better to get rid of cash on hand rather than stack it… of course not totally depleting yourself of cash but the dollar becoming of less value is very concerning. Thanks for your advice!

If that's the case and they understand it's a STR, then go with the bank.

I have recently been looking into this as well, and am looking into getting a "second home" mortgage, which requires 10% down, but MAY open up the possibility for renting it part time (i likely would rent it full time, but we will see).