Residential Loan of $50k or under

[Sean Wang]

Does anyone have experience borrowing residential loan of $50k or under? I heard most banks won’t lend for such low amount. My banker from Chase said he ‘believe’ the lowest amount they can lend is $10k. He doesn’t sound confident. 

[Roger Howell]

As a banker, a couple of things come to mind:

One, there are federal laws that limit the fees on a percentage of the loan amount.  Over that percentage, and the loan is considered  a"High Cost Loan" and most institutions have overlays against doing high cost loans.  There are also legal liabilities if you do it.  Not worth the liability.

The other consideration is the amount of interest and fees the institution earn on low loan amounts are not worth the cost, High Cost rules notwithstanding.  I work just as hard on a 50k deal as a 500k, but make 10 times more on the larger loan.  Which loans do you think I would be looking at first?

For loans that are not subject to the current rules, you need to look at alternates like Hard Money, Private Money, unsecured lines of credit, and even credit cards with enough of a cash limit to do deals.  Those rates will be higher than a bank mortgage.

I would pay higher for money that can be accessed without having to jump through all the hoops of getting a bank mortgage.