All Forum Posts by: Jerry Padilla

At MB Financial we are a National Lender that goes above and beyond for our clients and I cater to assisting investors with all of their financing needs, including primary residence financing:

A credit tool to assist with improving your (or your clients) credit score to qualify for financing (Free of Charge)

Investor loans - Financing for up to 10 investment properties, with Conventional Financing, backed by Fannie Mae, or Freddie Mac
Conventional or Refinance

Cash Out Financing on the first four investment property's

Delayed financing with up to ten mortgages

Credit scores down to 600 on FHA/VA/USDA loans - primary residence only
National lender!

Streamline refinance programs for FHA/VA/Conventional - Save money with less documentation

Low rates & Low closing costs

I am available extended hours
Opportunity to increase your business to have more capital available for purchasing and rehabbing

Lender credit available for purchases

Automated approval system

BRRR....... Buy Rent Rehab Refinance

CASH OUT FINANCING

A cash out refinance is exactly what it sounds like. It is when you refinance your property and pull money out of a property. The mortgage can either be paid off free and clear or can have enough equity in the property to make it worth refinancing and pulling money out. Cash out refinances are available on primary and investment properties.

• The typical cash out financing is done after 6 months of owning the property, based on ARV and available for mortgages #1-4. Please see delayed financing for less than 6 months after closing.
• On a primary residence you can pull out up to 80% LTV on a SFR and up to 75% LTV on 2-4 unit multi-families.
• On an investment property; A SFR if you have #1-4 mortgages you can pull out up to 75% of the equity and a duplex is up to 70% equity.
• On an investment property; If you have #5-10 mortgages you can only pull out money in the first 6 months (delayed financing) that you own the property, if you didn't originally get a mortgage on the property. As long as the value is there (on a SFR 70% LTV and duplex 65% LTV) You can take out up to the purchase price plus closing costs on the property.
• RATE and TERM REFINANCE - PROPERTY
• 5-10 If you are willing to pay the fees and go through two closings.... You can take out private or hard money on free and clear properties #5-10 and do a rate and term refinance with conventional to pull money out on them.
• PROPERTIES LISTED FOR SALE
  For a rate and term refinance transaction, the borrower must evidence that the listing has been cancelled, and must not have been listed for sale as of the date of the application.
  For a cash-out transaction, the borrower must provide evidence that the listing was cancelled at least six months prior to the date of application.
• Cash Reserves Required For Other Properties Owned by Investor;
  
  • If the borrower has 1-4 mortgages, an additional two (2) months for every other SFR investment property and second home is required and additional six (6) months for every other 2-4 unit investment property and second home
  • If the borrower has 5-10 mortgages, An additional six (6) months for every other investment property and second home.

DELAYED FINANCING EXCEPTION

Delayed Financing Exception

A cash-out refinance within six (6) months of a purchase transaction when no financing was obtained for the purchase transaction are allowed under the following parameters:

• The new loan amount is not more than the actual documented amount of the borrower's initial investment in purchasing the property, plus the financing of closing costs, prepaid fees, and points (subject to the maximum LTV).

1. 1. SFR mortgage #1-4 - 75% LTV
2. 2. Duplex mortgage #1-4 70% LTV
3. 1. SFR mortgage #5-10 -70% LTV
4. 2. Duplex mortgage #5-10 - 65% LTV

• The purchase transaction was an arm’s length transaction
• The purchase transaction is documented by the HUD-1, which confirms that no mortgage financing was used to obtain the subject property. The preliminary title search or report must also confirm no liens on the subject property.
• The source of funds for the purchase transaction can be documented (bank statements, personal loan documents, HELOC on another property). Any loans used as the source for the purchase transaction will be required to be repaid on the new HUD-1.

  Funds received as gifts and used to purchase the property may not be reimbursed with proceeds of the new mortgage loan. Funds of gifts are not allowed with investment purchases.

• All other cash-out refinance eligibility requirements are met and cash-out pricing is applied. This is allowed on primary residences, second homes and investment properties per cash-out guidelines.
  • Ineligible Transactions
    The following transaction types are not eligible as cash-out refinances:
    
    • The subject property was purchased by the borrower within the six months preceding the application for new financing except if delayed financing guidelines are met.
    • Investor and second home borrowers with 5-10 properties are ineligible for cash-out refinance transactions unless all of the delayed financing guidelines are met.
    • The subject property is currently listed for sale
    • The existing mortgage is a “restructured mortgage”
    • Transactions in which a portion of the proceeds of the refinance is used to pay off the outstanding balance on an installment land contract regardless of the date the installment land
      contract was executed.
    • The new loan amount includes the financing of real estate taxes that are more than 60 days delinquent and an escrow account is not established.

  This information is accurate as of the time of posting. Please also verify the accuracy of this information at the time you are considering these options as guidelines change.
  https://www.fanniemae.com/content/guide/selling/b2...

Rate & Term Refinance

Freddie Mac and Fannie Mae are both conventional lenders. They each have their own set of guidelines to be followed. There are investor friendly lenders that are able to specifically follow just one of the guidelines below. Below are the required LTV for Rate and Term Refinances.

THESE ARE FOR MORTGAGE 1-4;

For Freddie Mac, a Rate and Term Refinance for a Primary Residence;

95% for 1 unit

80% LTV for 2-4 units

For Fannie Mae, a Rate and Term Refinance for a Primary Residence;

1 unit - 95%

2 unit - 85%

3-4 unit is 75%

For Freddie Mac, a Rate and Term Refinance for a Investment Residence;

75% for 1-4 Units

For Fannie Mae, a Rate and Term Refinance for a Investment Residence;

75% for 1-4 Units

5-10 Mortgages;

For Fannie Mae, a Rate and Term Refinance for a Investment Residence;

75% for 1 Units

70% for 2-4 Units

FHA Rate and Term Refinance -

Maximum LTV is 97.75%

FHA Cash Out Refinance -

Maximum LTV is 85% of appraised value if property has been owned 12 months or greater, and if less than 12 months from purchase than the lesser of purchase price or appraised value is used.

Please also see the qualifications for obtaining a second FHA Mortgage.

https://www.biggerpockets.com/blogs/5110/blog_post...

Some areas we lend in, but are not limited to are;

Indianapolis, Carmel, Muncie, Las Vegas, Henderson, San Antonio, New Braunfels, Cincinnati, Wilmington, Maysville, Wisconsin, Milwaukee, Racine, Waukesha, Raleigh, Durham, Chapel Hill, Nashville, Davidson, Murfreesboro, Austin, Round Rock, Virginia Beach, Norfolk, Fresno, Madera, Knoxville, Morristown, Sevierville, Dayton, Springfield-Sidney, El Paso, Las Cruces, Tucson, Nogales, Cape Coral, Fort Myers, Naples, Urban Honolulu, Chattanooga, Cleveland, Dalton, Bridgeport, Stamford, Norwalk, Worcester, Omaha, Nebraska, North Port Sarasota, Tulsa Muskogee, Bartlesville, Brownsville, Harlingen, Raymondville, Port St. Lucie, FL Metropolitan, Santa Maria, Santa Barbara, Salinas, Vallejo, Fairfield, Killeen Temple, Flint, Macon, Warner, Robins, Peoria, Canton, Reading,

@Bob E. exactly as @Bill Gulley said. Every source that I am aware of will not lend a conventional loan to an LLC, only individual names. Your terms are going to be shorter with a higher rate and ARM typically with a commercial loan.

Bill, no time period for a rate and term refinance, even mortgage 5-10, but the lien must be recorded against the property, and not in the individuals name or company. They are allowing cash out's on 3-4 units now as well, which is great for business.

@Lee Huffman Glad you had a good experience. Yes, underwriting will question large deposits. They have to ensure the money is truly yours for the down payments and not borrowed money...... Conventional lending has some of the greatest terms and rates. 

At MB Financial we are a National Lender that goes above and beyond for our clients and I cater to assisting investors with all of their financing needs, including primary residence financing:

A credit tool to assist with improving your (or your clients) credit score to qualify for financing (Free of Charge)

Investor loans - Financing for up to 10 investment properties, with Conventional Financing, backed by Fannie Mae, or Freddie Mac
Conventional or Refinance

Cash Out Financing on the first four investment property's

Delayed financing with up to ten mortgages

Credit scores down to 600 on FHA/VA/USDA loans - primary residence only
National lender!

Streamline refinance programs for FHA/VA/Conventional - Save money with less documentation

Low rates & Low closing costs

I am available extended hours
Opportunity to increase your business to have more capital available for purchasing and rehabbing

Lender credit available for purchases

Automated approval system

BRRR....... Buy Rent Rehab Refinance

CASH OUT FINANCING

A cash out refinance is exactly what it sounds like. It is when you refinance your property and pull money out of a property. The mortgage can either be paid off free and clear or can have enough equity in the property to make it worth refinancing and pulling money out. Cash out refinances are available on primary and investment properties.

• The typical cash out financing is done after 6 months of owning the property, based on ARV and available for mortgages #1-4. Please see delayed financing for less than 6 months after closing.
• On a primary residence you can pull out up to 80% LTV on a SFR and up to 75% LTV on 2-4 unit multi-families.
• On an investment property; A SFR if you have #1-4 mortgages you can pull out up to 75% of the equity and a duplex is up to 70% equity.
• On an investment property; If you have #5-10 mortgages you can only pull out money in the first 6 months (delayed financing) that you own the property, if you didn't originally get a mortgage on the property. As long as the value is there (on a SFR 70% LTV and duplex 65% LTV) You can take out up to the purchase price plus closing costs on the property.
• RATE and TERM REFINANCE - PROPERTY
• 5-10 If you are willing to pay the fees and go through two closings.... You can take out private or hard money on free and clear properties #5-10 and do a rate and term refinance with conventional to pull money out on them.
• PROPERTIES LISTED FOR SALE
  For a rate and term refinance transaction, the borrower must evidence that the listing has been cancelled, and must not have been listed for sale as of the date of the application.
  For a cash-out transaction, the borrower must provide evidence that the listing was cancelled at least six months prior to the date of application.
• Cash Reserves Required For Other Properties Owned by Investor;
  
  • If the borrower has 1-4 mortgages, an additional two (2) months for every other SFR investment property and second home is required and additional six (6) months for every other 2-4 unit investment property and second home
  • If the borrower has 5-10 mortgages, An additional six (6) months for every other investment property and second home.

DELAYED FINANCING EXCEPTION

Delayed Financing Exception

A cash-out refinance within six (6) months of a purchase transaction when no financing was obtained for the purchase transaction are allowed under the following parameters:

• The new loan amount is not more than the actual documented amount of the borrower's initial investment in purchasing the property, plus the financing of closing costs, prepaid fees, and points (subject to the maximum LTV).

1. 1. SFR mortgage #1-4 - 75% LTV
2. 2. Duplex mortgage #1-4 70% LTV
3. 1. SFR mortgage #5-10 -70% LTV
4. 2. Duplex mortgage #5-10 - 65% LTV

• The purchase transaction was an arm’s length transaction
• The purchase transaction is documented by the HUD-1, which confirms that no mortgage financing was used to obtain the subject property. The preliminary title search or report must also confirm no liens on the subject property.
• The source of funds for the purchase transaction can be documented (bank statements, personal loan documents, HELOC on another property). Any loans used as the source for the purchase transaction will be required to be repaid on the new HUD-1.

  Funds received as gifts and used to purchase the property may not be reimbursed with proceeds of the new mortgage loan. Funds of gifts are not allowed with investment purchases.

• All other cash-out refinance eligibility requirements are met and cash-out pricing is applied. This is allowed on primary residences, second homes and investment properties per cash-out guidelines.
  • Ineligible Transactions
    The following transaction types are not eligible as cash-out refinances:
    
    • The subject property was purchased by the borrower within the six months preceding the application for new financing except if delayed financing guidelines are met.
    • Investor and second home borrowers with 5-10 properties are ineligible for cash-out refinance transactions unless all of the delayed financing guidelines are met.
    • The subject property is currently listed for sale
    • The existing mortgage is a “restructured mortgage”
    • Transactions in which a portion of the proceeds of the refinance is used to pay off the outstanding balance on an installment land contract regardless of the date the installment land
      contract was executed.
    • The new loan amount includes the financing of real estate taxes that are more than 60 days delinquent and an escrow account is not established.

  This information is accurate as of the time of posting. Please also verify the accuracy of this information at the time you are considering these options as guidelines change.
  https://www.fanniemae.com/content/guide/selling/b2...

Rate & Term Refinance

Freddie Mac and Fannie Mae are both conventional lenders. They each have their own set of guidelines to be followed. There are investor friendly lenders that are able to specifically follow just one of the guidelines below. Below are the required LTV for Rate and Term Refinances.

THESE ARE FOR MORTGAGE 1-4;

For Freddie Mac, a Rate and Term Refinance for a Primary Residence;

95% for 1 unit

80% LTV for 2-4 units

For Fannie Mae, a Rate and Term Refinance for a Primary Residence;

1 unit - 95%

2 unit - 85%

3-4 unit is 75%

For Freddie Mac, a Rate and Term Refinance for a Investment Residence;

75% for 1-4 Units

For Fannie Mae, a Rate and Term Refinance for a Investment Residence;

75% for 1-4 Units

5-10 Mortgages;

For Fannie Mae, a Rate and Term Refinance for a Investment Residence;

75% for 1 Units

70% for 2-4 Units

FHA Rate and Term Refinance -

Maximum LTV is 97.75%

FHA Cash Out Refinance -

Maximum LTV is 85% of appraised value if property has been owned 12 months or greater, and if less than 12 months from purchase than the lesser of purchase price or appraised value is used.

Please also see the qualifications for obtaining a second FHA Mortgage.

https://www.biggerpockets.com/blogs/5110/blog_post...

Some area's we lend in, but are not limited to are: Mobile, Daphne, Fairhope, Visalia, Porterville, Hanford, Dalton, Daytona Beach, Ormond Beach, Reno, Carson City, Fernley, Augusta, Richmond County, Scranton, Wilkes, Barre Hazleton, Provo Orem, Palm Bay, Melbourne, Titusville, Fayetteville, Lumberton, Laurinburg, Lansing, East Lansing, Owosso, Springfield Branson, Mobile, Daphne, Fairhope, Reading, Kalamazoo, Battle Creek-Portage, Durham, Chapel Hill, Savannah, Hinesville, Statesboro, Corpus Christi, Kingsville Alice, Johnson City, Kingsport, Bristol, Columbus, Auburn Opelika, Santa Rosa, Fayetteville, Springdale, Rogers, Asheville, Brevard, Pensacola, Ferry Pass, Brent, Shreveport, Bossier City, Rockford, Freeport, Rochelle, York, Hanover

Some more info on Sub $50k Financing and Sub $30k Financing, even Sub $20k financing.

Financing can be obtained with loan limits down to $10k. You can do up to 10 sub 50k loans, with the option of a 15, 20 or 30 year term.

For A Fixed Rate Purchase, Investment properties, Mortgages 1-4;

• A SFR requires a LTV of 85%
• A MFR requires a LTV of 75%
• A minimum credit score of 620

For A Fixed Rate Purchase, Investment properties, Mortgages 5-10;

• A SFR requires a LTV of 75%
• A MFR requires a LTV of 70%
• Minimum credit score of 720

Here are some answers to FAQ as well;

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

Cash Reserves Required For Other Properties Owned by Investor;

• If the borrower has 1-4 mortgages, an additional two (2) months for every other SFR investment property and second home is required (if >30% equity and six (6) months reserves if not) and additional six (6) months for every other 2-4 unit investment property and second home
• If the borrower has 5-10 mortgages, An additional six (6) months for every other investment property and second home.

2. Gift funds are not allowed on Investment property transactions.

3. Escrows for taxes and insurance are required unless otherwise approved by the underwriter.

4. Loans for investment properties are not eligible if the transaction includes non-arm’s length and/or at-interest characteristics

5. Investment property transactions cannot close in trust.

6. Maximum 2% sellers concessions is allowed!!

Maximum loan amounts for areas that are not considered high cost are;

1 unit - $417,000

2 unit - $533,850

3 unit - $645,300

4 unit - $801,950

This information is accurate as of the time of posting. Please also verify the accuracy of this information at the time you are considering these options as guidelines change. 

If you currently have a private or hard money mortgage, than you have the ability to do a Rate and Term Refinance to lower your interest rate.

For A Fixed Rate, Investment properties, Mortgages 1-4;

• A SFR requires a LTV of 75%
• A MFR requires a LTV of 75%
• A minimum credit score of 620

For A Fixed Rate, Investment properties, Mortgages 5-10;

• A SFR requires a LTV of 75%
• A MFR requires a LTV of 70%
• Minimum credit score of 720

Here is more info on conventional financing.

http://www.biggerpockets.com/blogs/5110/blog_posts...

Cashing out on the first four mortgages, in an individual's name.

• The typical cash out financing is done after 6 months of owning the property, based on ARV and available for mortgages #1-4. Please see delayed financing for less than 6 months after closing.
• On a primary residence you can pull out up to 80% LTV on a SFR and up to 75% LTV on 2-4 unit multi-families.
• On an investment property; A SFR if you have #1-4 mortgages you can pull out up to 75% of the equity and a duplex is up to 70% equity.
• On an investment property; If you have #5-10 mortgages you can only pull out money in the first 6 months (delayed financing) that you own the property, if you didn't originally get a mortgage on the property. As long as the value is there (on a SFR 70% LTV and duplex 65% LTV) You can take out up to the purchase price plus closing costs on the property.

https://www.biggerpockets.com/blogs/5110/blog_post...

• If you are willing to pay the fees and go through two closings.... You can take out private or hard money on free and clear properties With mortgage #5-10 and do a rate and term refinance with conventional to pull money out on them.

For mortgages 5-10 - if you paid cash for the property, you have the ability to cash out on the property with delayed financing.

Delayed Financing Exception

A cash-out refinance within six (6) months of a purchase transaction when no financing was obtained for the purchase transaction are allowed under the following parameters:

• The new loan amount is not more than the actual documented amount of the borrower's initial investment in purchasing the property, plus the financing of closing costs, prepaid fees, and points (subject to the maximum LTV).

1. 1. SFR mortgage #1-4 - 75% LTV
2. 2. Duplex mortgage #1-4 70% LTV
3. 1. SFR mortgage #5-10 -70% LTV
4. 2. Duplex mortgage #5-10 - 65% LTV

http://www.biggerpockets.com/blogs/5110/blog_posts...

Here is a guideline from Fannie Mae on the maximum limits for conventional mortgages.

https://www.fanniemae.com/singlefamily/loan-limits

@James Wise

@Engelo Rumora

It would be great to see you two do a video together! 

When investing in one of the most profitable parts of the country...... You two are the only ones that investors need to know! With your knowledge and determination together - it doesn't get any better! Future purchases I make will be in OH and no longer in NY - taxes are too high here and I would profit greater even paying the maintenance fees  and I won't have to be the one to deal with the tenants or contractors. Hehehe I can't wait to see what the new year brings for all of us. 

@Ron Woods My clients use seller concessions all the time. All banks have different overlays. MB Financial has very little overlays. 

@Nathan Zhivalyuk

I would be glad to assist you. The properties would have to be transferred into your personal name, though. We are a Fannie Mae and Freddie Mac backed lender and unfortunately can't lend to an LLC.

@James Martin Absolutely, we lend in almost every state. 

@James Wise

@Federico Gutierrez

Here is some more info from my blogs on FHA Financing.

Single Family Residence or The rental units are an owner-occupied two (2), three (3) or four (4) unit property

Maximum Basic Standard Financing

Single - $271,050

Duplex - $347,000

Triplex - $419,425

Fourplex - $521,250

FHA Basic High Cost area limits are:

Single - $625,500

Duplex - $800,775

Triplex - $967,950

Fourplex - $1,202,925

Financing for Hawaii, Alaska, Guam, Virgin Islands -

Single - $938,250

Duplex - $1,201,150

Triplex - $1,451,925

Fourplex - $1,804,375

Here is the site to search by county for the maximum financing.

https://entp.hud.gov/idapp/html/hicostlook.cfm

Maximum Financed Properties

• The maximum of four financed properties includes the subject property.

Inducements to Purchase

• Certain expenses, paid by the seller and/or another interested third party, on behalf of the borrower, are considered "inducements to purchase" and result in a dollar for dollar reduction to the lesser of the sales price or appraised value of the property before applying the appropriate LTV factor. These expenses include:
• Contributions up to 6% of the sales This information is accurate as of the time of posting. Please also verify the accuracy of this information at the time you are considering these options as guidelines change.price
• Decorating allowances
• Repair allowances
• Moving costs
• Note—a dollar for dollar sales price reduction is also required for - Excess rent credit and gift funds not meeting FHA requirements Contributions exceeding the actual cost of prepaid expenses, discount points and other financing concessions

Credit Requirements

• Required is 600. FICOs below 620 have maximum DTI of 43% regardless of AUS approve/accept
• Minimum of 2 trade lines are required
• No more than $1,000 in disputed collections
• Must be all on time payments in the past 12 months of mortgage history
• No more than $2,000 in collections ........ Medical bills are excluded.
• Minimum of 2 years from Chapter 7 or 13 bankruptcy discharge
• Minimum of 3 years from Preforeclosure, short sale, deed in lieu, foreclosure from discharge date or release date.

Down Payment Requirements

• The borrower is required to make a minimum down payment into the transaction of at least 3.5% of the lesser of the appraised value of the property or the sales price. The borrower must have sufficient funds to cover borrower-paid closing costs and fees at the time of settlement. Gift funds are considered part of borrower’s own funds.
• 60 day history is required to verify the source of the down payment. Down payment can not be borrowed, from any source.
• Gifts may be funded by a family member....... But must be verified by 60 day history, and must be a gift with no requirement to pay back.

Reserve Requirements

• 3-4 Unit owner occupied properties must have 3 months PITI

Three (3)- and Four (4)-Unit Property

The maximum mortgage amount for the three (3) - and four (4)-unit properties is limited, so that the ratio of the monthly mortgage payment, divided by the monthly net rental income does not exceed 100%, regardless of the occupancy status.

Livable Conditions

1. The property must demonstrate the following characteristics:

A continuing and sufficient supply of safe and potable water under adequate pressure and of

appropriate quality for household uses.

Sanitary facilities and a safe method of sewage disposal. Every living unit must have at least one (1)

bathroom which includes a flushing toilet, lavatory/sink and a bathtub/shower.

A source of heat adequate for healthful living conditions.

Domestic hot water, and;

Electricity adequate for lighting and any mechanical equipment within the home.

Provide safe pedestrian and vehicular access from a public or private street. Streets must either be

devoted to public use and maintenance, or private streets protected by permanent recorded

Easements.

The remaining economic life, as determined by the appraisal, must be greater than or equal to the term

of the proposed mortgage.

Be free of any encroachments.

Utility Service must be permanently dedicated to the local municipality or appropriate public utility entity

as evidenced by recorded easements.

Up Front Mortgage Insurance Premium - For most of its mortgage insurance programs, FHA collects an:

• Upfront mortgage insurance premium (UFMIP), and
• Annual insurance premium which is collected in monthly installments

Mortgage Insurance Premium - For 15 year and greater than 15 years.

• 1.75% of purchase price

Annual Insurance Premium

• Greater than 15 years & greater than or = 95% LTV - 0.8%
• Greater than 15 years & less than 95% LTV - 0.85%
• Less than or = 15 years & Grester than 90% LTV - 0.7%
• Less than or = 15 years & less than 90% LTV - 0.45%

High Balance Loan Amounts

• Less than or = to $625,000 & less than or = to 95% LTV - 0.8%
• Less than or = to $625,000 & greater than 95% LTV - 0.85%
• Greater than $625,000 & less than or = to 95% LTV - 0.1%
• Greater than $625,000 & greater than 95% LTV - 0.105%

INCOME—RENTAL

Rental income from a borrower’s primary single family residence (boarder income) is not acceptable for qualifying.

Rental Income from the subject property may be considered effective income if the subject property is a 2-4 unit dwelling. Required documentation is dependent upon the length of time the borrower has owned the property.

Rental Income – Subject Property For FHA Mortgage

Limited or No History of Rental Income

Defined as when the borrower is purchasing or does not have a history of rental income from the subject property since the previous tax year.

If rental income is from other property owned other than subject, must show 25% equity in property by appraisal.

In order to calculate Rental Income from a 2-4 unit subject property, the following documentation must be provided:

Fair Market Rent must be calculated using FNMA 1025/FHLMC 72 – Small Residential Income Property Appraisal Report; and Copies of existing or proposed leases, if available.

Calculating Effective Rental Income

Any net rental income from the subject property must be added to the borrower’s qualifying gross monthly income by applying 75% of the lesser of;

Fair Market Rent reported by the appraiser; or

The rent reflected on the existing or proposed lease agreement.

History of Rental Income.

When a borrower has a history of receiving rental income from the subject property since the previous tax year, the borrower must provide most recent Federal Tax Returns, including IRS Schedule E, covering the previous two (2) years

Calculating Effective Rental Income

Any net rental income from the subject property must be added to the borrower’s qualifying gross monthly income after averaging the reported net rental income/loss reflected on Schedule E of the tax returns.

When calculating the average net rental income/loss, any depreciation, mortgage interest, taxes, insurance, and HOA dues reflected for the subject property may be added back to the net income/loss.

 If the borrower has owned the subject property for less than 2 years, rental income/loss must be annualized for the length of time the property has been owned.

FHA Rate and Term Refinance -

Maximum LTV is 97.75%

FHA Cash Out Refinance -

Maximum LTV is 85% of appraised value if property has been owned 12 months or greater, and if less than 12 months from purchase than the lesser of purchase price or appraised value is used.

Some crucial guidelines that sometimes go unnoticed ......... But will make or break your FHA deal with a 3-4 unit...... (More of an issue, typically in high cost area's, not as much of an issue in Cleveland, but worth keeping a mental note)

Reserve Requirements

• 3-4 Unit owner occupied properties must have 3 months PITI

Three (3)- and Four (4)-Unit Property

The maximum mortgage amount for the three (3) - and four (4)-unit properties is limited, so that the ratio of the monthly mortgage payment, divided by the monthly net rental income does not exceed 100%, regardless of the occupancy status.

• This market rent is determined by the appraiser. Basically this is stating that what the market rents are need to equal the mortgage payment or exceed. The FHA house needs to pay for itself as if the property was fully rented out, even though the buyer will be living in one of the units.

Exceptions to the FHA Policy Limiting the Number of FHA Mortgages per Borrower

The only circumstances in which a borrower with an existing FHA insured loan for a principal residence may obtain another FHA insured mortgage on a new principal residence.

Relocation -A borrower may be eligible to obtain another FHA-insured mortgage without being required to sell an existing property covered by an FHA-insured mortgage if the borrower is:

Relocating or has relocated for an employment related reason, and

Establishing or has established a new principal residence in an area more than 100 miles from the borrower’s current primary residence.

If the borrower moves back to the original area, the borrower is not required to live in the original house and may obtain a new FHA-insured mortgage on a new principal residence. As long as the relocation meets the two requirements above.

Increase in Family Size - A borrower may be eligible for another house with an FHA-insured mortgage if the borrower provides satisfactory evidence that

The has had in increase in legal dependents and the property now fails to meet the family’s needs; and

The loan-to-value (LTV) ratio on the current principal residence is equal to or less than 75% or is paid down to that amount, determined by comparing the outstanding mortgage balance to a current residential appraisal.

Vacating a jointly-owned Property - A borrower may be eligible for another FHA-insured mortgage if the borrower is vacating (with no intent to return such as divorce, legal separation, etc...) the principal residence which will remain occupied by the existing co-borrower.

Non-occupying Co-borrower - A non-occupying co-borrower on an existing FHA-insured mortgage may qualify for an FHA-insured mortgage on a new property to be their own primary residence.

@James Wise

@Nicholas Varner

Here is some more info. on VA Financing Directly from my blog. Thank You for taking the time to interview me! It also includes the link to click on for Maximum loan amounts per county.

For VA home loan purposes, a veteran is a person who has served or is currently serving on active duty in the United States Military or Coast Guard and who was discharged or released from active duty under conditions other than dishonorable. Un-remarried surviving spouses of an eligible service member who died as a result of service or service-related injuries may also be eligible.

ELIGIBLE PROPERTY TYPES

1 – 4-unit single family detached homes

PUDs

Townhouses

Condominiums—per VA guidelines

INCOME

In order to be considered for approval of a VA home loan, income stability is a mandatory requirement

Veterans recently separated from the service must have a minimum 2 year work history in the same line of work that he/she did in the service. The veteran should be in his/her most recent job for at least 12 months.

W-2s for the last two years

Signed Federal tax returns for the past 2 years for self-employed borrowers and rental income/loss

MAXIMUM FINANCED PROPERTIES

The maximum number of financed properties that the borrower(s) can have is four (4). However, the borrower must still have remaining VA eligibility for a VA loan.

GIFTS

A gift letter, source of funds and evidence of transfer of gift funds is required.

MAXIMUM LTV

100% for Purchase transactions
90% for Refinance transactions
100% for IRRRL Refinance transactions

MINIMUM CREDIT SCORE

For loan amounts </= $417,000, the minimum FICO score required is 600. For loan amounts > $417,000, the minimum FICO score required is 700.

MINIMUM LOAN AMOUNT

There is no minimum loan amount for VA. MB Financial allowes $10k loan amount minimums.

OCCUPANCY

Owner-occupied, primary residences are allowed. Second homes or investment properties are not allowed.

RESERVE REQUIREMENTS
If the loan amount is $417,000 or less and the borrower is not qualified with rental income, there are no requirements for cash reserves. If the borrower uses rental income to qualify or if the loan amount is greater than $417,000, six (6) months of reserves must be documented.

SELLER CONCESSIONS

Seller concessions include, but are not limited to, the following:

Payment of the buyer's VA funding fee

Prepayment of the buyer’s property taxes and insurance

Gifts such as a television set or microwave oven

Payment of extra points to provide permanent interest rate buydowns

Provision of escrowed funds to provide temporary interest rate buydowns,

Payoff of credit balances or judgments on behalf of the buyer

Seller concessions do not include payment of the buyer’s closing costs or payment of points as appropriate to the market.

Any seller concession or combination of concessions which exceeds 4% of the established reasonable value of the property is considered excessive, and unacceptable for VA guaranteed loans.

Here is a link to VA's site with the maximum VA loan limits, in 2015. This year it is the same as FHFA or Freddie Mac and Fannie Mae's guidelines.

http://www.benefits.va.gov/homeloans/purchaseco_lo...

Interest Rate Reduction Refinance Loan for Veterans.

The VA Interest Rate Reduction Refinance Loan (IRRRL) lowers your interest rate by refinancing your existing VA loan. By reducing your interest rate, your monthly mortgage payment should decrease. You can also refinance an adjustable rate mortgage (ARM) into a fixed rate mortgage.

IRRRL Info

• No appraisal or credit underwriting package is required when applying for an IRRRL.
• An IRRRL may be done with "no money out of pocket" by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.
• When refinancing from an existing VA ARM loan to a fixed rate loan, the interest rate may increase.
• No CASH OUT with IRRRL
• 6 month mortgage history required.
• No credit underwriting is required as long as....... Existing loan must not be past due more than 30 days, or the payment doesn't increase by more than 20% if reducing term.
• Credit pulled with a required score of 600.
• May not extend term of the refinance more than 10 years from original term.

Here are some of the locations we lend in, but are not limited to. Virginia Beach, Norfolk, Riverside, San Bernardino, San Diego, Carlsbad, Las Vegas, Dallas, Fort Worth, Arlington, Jacksonville, Richmond, Memphis, Tucson, Albuquerque, Washington DC, Tampa, Baltimore, Houston, Atlanta, Ventura, Omaha, Bakersfield, Dayton, Columbia, Cleveland are all area's with a high population of veterans.

@Engelo Rumora 

Don't be jealous. I will be visiting you soon as well. You are even farther than @James Wise   You both have great business plans and are very good to me! I try and do my best to assist you both :-) I have plans of expanding as well to better support the growth of both of you! I can't wait to see what this year brings for all of us! Toledo and Cleveland are some of the most profitable locations to invest and you both taking on the world. You both are great and knowledgable at what you do! Next time I am going to plan a longer stay. :-)