Thank you to everybody in advance for helping me to stop banging my head against a wall (or for encouraging more headbutts).
So far, the lenders I've contacted either don't have a conventional 95 product at all, or don't allow it's use on more than a duplex. So far, I've contacted New American, Better, and Quicken. Should I be looking at local lenders rather than national? Are there any lenders you know of that do offer this or a similar product?
A little background:
Summary: I'm looking for a conventional 95 because I won't qualify for an FHA until January - I have an employment gap over 6 months due to COVID. I'm over the income cap for the Home-possible program.
I had a multi-family (my first) under contract in march 2020, then got furloughed in April. The company I worked for ended up having to sell itself to stay afloat, at which point I began picking up a few more certifications (I'm a network/systems administrator). I got my vaccination at the end of May and began looking for a new gig in earnest, had a few offers mid June, and was back to work (at a higher salary) at the start of July. I've read that lenders are making exceptions for COVID-related gaps, but I've yet to find one.
Thanks again. I appreciate all the help I've received already and would like to be able to give back soon!
Updated about 1 month ago
Re: the Home-possible program, I'm not sure if that relies on listed salary or actual earned income. If it's the latter, I may qualify for it this year.
@Brian Burke this is a tough one for sure. The 5% down conventional is (mostly) dead due to all the limitations that were put on it in 2019. There is still a lot of misinformation floating around, but on the ground mostly people are using FHA now or putting down 20-25% and going conventional. There are a few local options that have 10% down portfolio loans, but it is pretty tough to use a 5% down right now.
You should connect with @Joshua Jones . He has been my lender since I got started with investing, and he knows these programs inside and out.
Surprised they didn't let you know earlier during pre-approvale that 4 unit home possible is long gone (other then specific circumstances you probably don't qualify for due to too high income). Only option would be FHA or call around credit unions and see if one will do it maybe at a bit higher 10% I have seen OK'd for a portfolio type loan.
Thanks everyone! In the event that I do find one or more lenders that can handle the above, I'll post them here. I imagine I'm not the only person in this situation.
@Brian Burke I totally get your frustration. There are a half dozen lenders in the Chicago forums that all know all of the best ways to handle low down payment. Like Henry mentioned, the home possible is now locally nicknamed the home impossible! It was our favorite loan until 2019 when the guidelines became so narrow that it no longer functions in the Chicago market.
Finding your lender is probably the single most important thing you do when you are getting started. I found my guy @Joshua Jones through a stroke of good luck as I had been floundering with a bunch of the traditional lenders who had ZERO idea about how 2-4 unit loans work. All of the national and local lenders that are using FHA or conventional loans are playing from the same playbook, so its not like you can find one small local bank that uses one of these products differently. If anything, a few of the big national lenders are MORE restrictive than the guidelines require.
If you end up wanting to do a 10% down loan there is a portfolio lender here in Chicago that does a 10% down loan. That may be an option you can explore.
I meant to include on the tag. See homepossible update above this post
Just gotta add to what John said, Josh Jones made things happen for me that 2 other respected lenders couldn’t do.
@John Bradley I did see that. When we dug into it more though, the requirements still didn't allow most people to qualify.
@Brian Burke - Definitely stay after it and you'll find a way to make it work. I'd definitely start by linking up with some local lenders that work with investors like @Zack Karp or @Michael Facchini . Both should be able to point you in the right direction as far as available loan products. I also know that A&N Mortgage has a 10% down so if that interests you please let me know and I can provide contact info.
I'm going to discourage any more head banging and encourage you to just keep taking action!
@Brian Burke - lots of great intel above. As mentioned, HomePossible might be an option for you depending on income and the area. Your income cannot exceed 80% of the area's median income. However, with multi-units it gets challenging as the rental income can count towards your total annual income, which you might need to qualify for the property. So, property price and your debt ratio without the rents is part of the consideration here too. Gets a little complicated. Otherwise, we have a program that allows for 5% down on 2units, no income cap, but depends on where the property is located. Past that (and not including FHA), the only other option is 10% down which I can share more info on as well. Hope that helps!
@John Warren Ah yes, the good ole days of Home Possible with no income limits..
@John Bradley the days were good while they lasted! There are always changes to lending, and we just have to roll with them and look for new opportunities.