Financing Investment Properties with Conventional, Low Rates

Posted January 30, 2020 20:08

FINANCING YOUR INVESTMENT PROPERTIES WITH CONVENTIONAL:

Required Documents:

Important Info You Need To Know:

Gift funds are not allowed on Investment property transactions.
Escrows for taxes and insurance are required unless otherwise approved by the underwriter.
Loans for investment properties are not eligible if the transaction includes non-arm’s length and/or at-interest characteristics
Investment property transactions cannot close in trust.
Maximum 2% sellers concessions is allowed!!
***** New Investors - Now Require 1 year of rental history or property management experience to count rental income! For those with experience 75% of market or current rental income can be counted towards qualifying.

You can borrow for up to 10 conventional mortgages! You have the option of a 15, 20 or 30 year term.

For A Fixed Rate Purchase, Investment properties, Mortgages 1-6;

For A Fixed Rate Purchase, Investment properties, Mortgages 7-10;

For all 1- to 4-unit investment property transactions, cash reserves equal to 6 months PITI for the subject property are required.

Cash Reserve Requirements:

6 months PITI is required on subject property.

If you have 1-4 financed properties than it is now 2% of all unpaid principle balances.

If you have 5-6 financed properties than it is now 4% of all unpaid principle balances.

If you have 7-10 financed properties than it is now 6% of all unpaid principle balances.

Money must be in account for 60 days or sourced. A HELOC can be used as down payment, but not as cash reserves.

Acceptable Sources of Reserves; Cash and assets that are liquid or near liquid:

Checking or savings accounts
Investments in stocks, bonds, mutual funds, certificates of deposit, money markets funds and trust accounts
The amount vested in retirement savings accounts
Cash value of a vested life insurance policy
Certain assets must be “discounted” when used for reserves. Terms and conditions of liquidation may be required depending on the asset used for reserves.
**Assets Requiring Liquidation
The following may be counted as cash assets at 100% of verified liquidated amounts:
- Cash value of life insurance
- Publically traded stocks
- Bonds
- Mutual Funds
- U.S. Government Securities
- Savings Bonds
- Retirement Funds
Gift Funds - Primary Residence and Second Home ONLY

Maximum Loan Limit Look up for your area can be found here;