Re-fi a duplex out of an FHA

[Bryant Sala]

Hi everyone! I'm looking to re-fi my duplex out of an FHA so that we can re-use it on another small multifamily here in Cincinnati.

I've been told by a few lenders that since it's a duplex, I need 85% LTV to re-fi, which we don't quite have yet (closer to 11-12% LTV). Are there any lenders that can help us re-fi into a conventional product with less than 85% LTV?

Thanks again!

[Andrew Postell]

@Bryant Sala Freddie Mac does have a product that will allow as little as 5% equity but only if your income is at a certain level.  It would be strange if your current lender didn't know about this product...so either your income is too high to qualify for the product...or maybe they just don't offer it.  Either way, I would absolutely recommend to seek out a different lender.  A couple of pointers for that:

Usually with seeking a local referral we should lean on other local people.  Whether it's a plumber, contractor, or even lender, going local is usually the right way to go first.  Try to post in some local real estate group facebook pages.  If you search "Cincinnati Real Estate Investor" in facebook several pages will come up with thousands of members.  Join those.  Then share your scenario in there...but ask ANOTHER investor to recommend a good lender knowledgeable about 2-4 unit properties. And I appreciate everyone who is trying to earn a living...but get the recommendation from ANOTHER investor rather than taking up a post from another lender.  It may not be foolproof, but taking a recommendation from another investor/homeowner that has worked with a specific lender would be a good place to start.

In the future, try some local real estate meetup groups that meet in person. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. But post locally for this. That’s the best bet.

[Bryant Sala]

Thank you Andrew! This is very helpful.

[Ryan Thomson]

Oooof that's going to be hard to find. Your only bet is finding a portfolio lender. I think your better plan would be to find a portfolio lender who will get you a primary multifamily loan for 5-10% down. I've heard they are out there. Takes a lot of calling the local credit unions and small banks. 

[Laura Shinkle]

@Andrew Postell what's the income limit for that product? And it's conventional, not FHA/VA?

[Andrew Postell]

@Laura Shinkle this is a county specific thing. Each county will have it's own income limits since it's based on a national calculation. Since you are a realtor I would suggest asking your preferred lender to educate you on the counties you serve and the program outlines. As in, maybe have a meeting about it. Might be good to spend 15 minutes to learn about it type of thing. This is a conventional loan product. Not FHA/VA/USDA.

[Laura Shinkle]

@Andrew Postell I've been told by every lender I know that 15% down is the minimum for a multifamily property, conventional loan. If you want to do less, FHA is the route to go. It's not for lack of asking questions, every lender I've asked (and I work with good ones), they've all told me the same thing.

If it's like similar loan programs targeting lower income folks, I don't think that loan product would work here (literally). Typically those are 80% of the median household income for the zip code/county/census map area.  Someone making that low of an income can't afford the payment on a $500k duplex. Our inventory of multifamily properties is really low and the prices are high. 

[Mateo Oquendo-Chandler]

Quote from @Bryant Sala:

Hi everyone! I'm looking to re-fi my duplex out of an FHA so that we can re-use it on another small multifamily here in Cincinnati.

I've been told by a few lenders that since it's a duplex, I need 85% LTV to re-fi, which we don't quite have yet (closer to 11-12% LTV). Are there any lenders that can help us re-fi into a conventional product with less than 85% LTV?

Thanks again!

 Bryant its been a while. Hope all is well. Why do you feel you need to change the first loan before you will be able to get a second one? 

[Bryant Sala]

Quote from @Mateo Oquendo-Chandler:

Quote from @Bryant Sala:

Hi everyone! I'm looking to re-fi my duplex out of an FHA so that we can re-use it on another small multifamily here in Cincinnati.

I've been told by a few lenders that since it's a duplex, I need 85% LTV to re-fi, which we don't quite have yet (closer to 11-12% LTV). Are there any lenders that can help us re-fi into a conventional product with less than 85% LTV?

Thanks again!

 Bryant its been a while. Hope all is well. Why do you feel you need to change the first loan before you will be able to get a second one? 

Mateo what's up!! So we want to househack another small multifamily with a low down payment loan product. But since we've already used our FHA, a conventional loan product requires 15% down on a 1-4 unit. So, if we re-fi out of the FHA into a conventional, we can re-use the FHA to househack again.

I do want to mention that since making this post, I did get referred to a few local lenders and found a low down payment portfolio loan product that will work for us. So no need to re-fi the FHA now. Woohoo! :)

[Laura Shinkle]

@Bryant Sala that's awesome you found some local lenders willing to lend! I really didn't want you to give your low interest rate on that FHA loan either! lol

[Bryant Sala]

Quote from @Laura Shinkle:

@Bryant Sala that's awesome you found some local lenders willing to lend! I really didn't want you to give your low interest rate on that FHA loan either! lol

 LOL same! Thank you again to the BP community, always there when needed

[Andrew Postell]

@Laura Shinkle yikes.  Very sorry to hear that.  This program has been around for many years now.  Here's the link to it:  Home Possible

I know several lenders in North Carolina that offer this.  If you need help with references let me know. 

[Anthony Freeman]

Quote from @Bryant Sala:

Hi everyone! I'm looking to re-fi my duplex out of an FHA so that we can re-use it on another small multifamily here in Cincinnati.

I've been told by a few lenders that since it's a duplex, I need 85% LTV to re-fi, which we don't quite have yet (closer to 11-12% LTV). Are there any lenders that can help us re-fi into a conventional product with less than 85% LTV?

Thanks again!

The lender wants you to have 15% equity before they refinance you?

[Bryant Sala]

Quote from @Anthony Freeman:

Quote from @Bryant Sala:

Hi everyone! I'm looking to re-fi my duplex out of an FHA so that we can re-use it on another small multifamily here in Cincinnati.

I've been told by a few lenders that since it's a duplex, I need 85% LTV to re-fi, which we don't quite have yet (closer to 11-12% LTV). Are there any lenders that can help us re-fi into a conventional product with less than 85% LTV?

Thanks again!

The lender wants you to have 15% equity before they refinance you?

Hey Anthony! Yup, from my understanding to re-fi out of a duplex under an FHA, traditional lender's ask for at least 15% equity (85% LTV).

[Anthony Freeman]

Quote from @Bryant Sala:

Quote from @Anthony Freeman:

Quote from @Bryant Sala:

Hi everyone! I'm looking to re-fi my duplex out of an FHA so that we can re-use it on another small multifamily here in Cincinnati.

I've been told by a few lenders that since it's a duplex, I need 85% LTV to re-fi, which we don't quite have yet (closer to 11-12% LTV). Are there any lenders that can help us re-fi into a conventional product with less than 85% LTV?

Thanks again!

The lender wants you to have 15% equity before they refinance you?

Hey Anthony! Yup, from my understanding to re-fi out of a duplex under an FHA, traditional lender's ask for at least 15% equity (85% LTV).

 After I asked that question I did some research and I find places that are asking you have 20% before a refinance. I originally learned that it was based upon time what some people would call a seasoning period. Now I see you actually need to make sure you are effectively paying down your principal in that time frame as well.