How To Get A Mortgage With More Than 4 Properties Financed

Question

I am running into this issue now. I know Fannie Mae now allows investors to purchase 5-10 rental properties but with 25% down and requiring a 6 month reserve on all financed properties. I don't meet all those requirements yet unfortunately. My question is if I were to put all my rental properties I have now into a LLC will it waive this 4 properties financed rule? My thought process is I could finance any new property under my name and then transfer into LLC so I can wash, rinse, repeat. The financing program I was looking at is "homepath" which only requires 10% down with no mortgage insurance.  But since I have 4 financed properties(3 rentals, 1 home) I don't qualify.

John Chapman · Answer

That will not work.  As I read your post, you want to transfer your current Fannie Mae properties to an LLC.  I presume you are on the mortgage, so transferring title does nothing to get around the 4 properties limit, and Fannie Mae will still count you as having 4 mortgages.  My understanding is that even if you were to transfer title to an LLC and then refinance in the LLC name (with a personal guarantee, which is generally required), then you still are limited by the 4-property rule.

Mitch Kronowit · Answer

This is right off the Homepath web site:

"Expanded financing opportunities are available for investors who may have existing financed properties to allow mortgages up to a total of 20 financed properties. The investor may be an LLC or an individual. HomePath Mortgage (HPM) is available on eligible properties noted with a HomePath Mortgage logo on the Property Details page of this site. Currently, a limited number of lenders offer this expanded financing."

http://www.homepath.com/investors.html

Scott W. · Answer

homepath reno's interest rates are about a point higher with 15% down & a couple of points. Correct, no PMI.

they give 50% to the GC halfway thru & the balance at closing. A GC will probably ask you to front the 50% at the beginning & then reimburse you. GC's have to be insured & bonded. If you hire anybody else, the GC pays them direct.

they also charge about $350 for appraisal after the work is done. You still pay $350 appraisal before you start the work.

Marlene D'Souza · Answer

Sweet :)

Marlene D'Souza · Answer

I would double check that I've spoken with several lenders and they all say 10 properties is the total.

Mitch Kronowit · Answer

Thanks! I just spoke to a loan officer that offers Homepath financing. She said 20 mortgages total. I assume she meant the regular Homepath mortgage as I didn't ask about the HP Renovation mortgage.

Marlene D'Souza · Answer

Hi I'm in the same boat with 4 properties and trying to get a homepath loan.  None of our properties are Fannie Mae Loan but they are counted in the total allowed.  The reserve can be in the form of other assest such as 401k  according to the lender I spoke with last week.   This lender also stated the Fannie Mae does not allow more than 4 loans out if you are appling for the FM Renovation loan.   The lender has to get a exception on reno loans over the initial 4,  but no exception is required for the straight Home Path.

John Chapman · Answer

I would also add that the reserve requirements of Fannie Mae are generally a good rule of thumb to adhere to when building a portfolio.  If you don't have that much in reserves, then I would slow down and build them up.

How To Get A Mortgage With More Than 4 Properties Financed

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