All Forum Posts by: Jerry Padilla

@Antonio Jaime

There are renovation loans that are an option as well. Fannie and Freddie both have options for renovation loans if this is a primary or an investment property.

@Joey DiFranco

I have a referral for a commercial broker with competitive rates.

@Ryan Merrifield

I agree on refinancing into conventional now with the low rates too! You will then have your VA freed up and ready to use for the next purchase. As mentioned if you don't have at least 20% equity, you will have to pay mortgage insurance.

@Martin Brady

Your only option is a product that goes based on the cash flow of the investment property. Rates and fee’s are going to be higher than conventional and you are going to be paying points too.

FHA Standard Loan Amounts

- Maximum loan amount as determined by FHA (Conforming Loan Limits depending on location and number of units - below)

- Each county has its own individual area ceiling limit, and can be found here;

FHA Loan Limits

House Hacking With An FHA Mortgage - FHA Financing;

No Maximum Financed Properties

This is an Owner Occupied Mortgage Product.

Inducements to Purchase

• Contributions up to 6% of the sales price from seller towards closing costs.

Down Payment Requirements

• Minimum down payment into the transaction of at least 3.5%. Gift funds are considered part of borrower’s own funds.
• 60 day history is required to verify the source of the down payment.
• Gifts may be funded by an immediate 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
• Reserves must be borrowers own funds and verified by a 60 day history.

Three (3)- and Four (4)-Unit Property - Must meet the Self Sufficiency Rule Below!

The maximum mortgage amount for 3-4 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 is also taking into consideration, a 25% vacancy factor.

Fee's associated with FHA Financing;

Upfront mortgage insurance premium (UFMIP), and

Annual insurance premium which is collected in monthly installments

Upfront 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 - 0.85%
• Greater than 15 years & less than 95% LTV - 0.80%
• Less than or = 15 years & Greater than 90% LTV - 0.7%
• Less than or = 15 years & less than 90% LTV - 0.45%

Annual Insurance Premium For Higher Balance Loan Amounts - Greater than $625k

• Greater than 15 years & greater than 95% LTV - 0.105%
• Greater than 15 years & less than or = to 95% LTV - 0.1%
• Less than or = to 15 years & greater than 90% LTV - 0.95%
• Less than or = 15 years & less than or = to 90% LTV - 0.7%
• Less than or = 15 years & less than or = to 78% LTV - 0.45%

INCOME—RENTAL

• 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

FHA Rate and Term Refinance -

Maximum LTV is 97.75%

FHA Cash Out Refinance -

Maximum LTV is 80% 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.

For an FHA 203k loan refer to this link;

FHA 203k Financing

FINANCING YOUR INVESTMENT PROPERTIES WITH CONVENTIONAL:

Required Documents:

• Credit report will be pulled tax returns for 2 years,
• Bank Statements and Assets - dating back to the past 60 days,
• W2's, pay stubs, and / or proof of income,
• Photo ID - Driver's License
• Gift Fund Letter - Allowed FOR PRIMARY Residence Only

Important Info You Need To Know:

• Gift funds are not allowed on Investment property transactions.
• Escrows for taxes and insurance are required unless otherwise approved by the underwriter.
• Loans for investment properties are not eligible if the transaction includes non-arm’s length and/or at-interest characteristics
• Investment property transactions cannot close in trust.
• Maximum 2% sellers concessions is allowed!!
• ***** New Investors - Now Require 1 year of rental history or property management experience to count rental income! For those with experience 75% of market or current rental income can be counted towards qualifying. 
  

You can borrow for up to 10 conventional mortgages! You have the option of a 15, 20 or 30 year term.

For A Fixed Rate Purchase, Investment properties, Mortgages 1-6;

• A SFR requires a LTV of 85%
• A MFR requires a LTV of 75%

For A Fixed Rate Purchase, Investment properties, Mortgages 7-10;

• A SFR requires a LTV of 80 - 85%
• A MFR requires a LTV of 75%
• Minimum credit score of 720

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

Cash Reserve Requirements:

6 months PITI is required on subject property.

If you have 1-4 financed properties than it is now 2% of all unpaid principle balances.

If you have 5-6 financed properties than it is now 4% of all unpaid principle balances.

If you have 7-10 financed properties than it is now 6% of all unpaid principle balances.

Money must be in account for 60 days or sourced. A HELOC can be used as down payment, but not as cash reserves.

Acceptable Sources of Reserves; Cash and assets that are liquid or near liquid:

• Checking or savings accounts
• Investments in stocks, bonds, mutual funds, certificates of deposit, money markets funds and trust accounts
• The amount vested in retirement savings accounts
• Cash value of a vested life insurance policy

  Certain assets must be “discounted” when used for reserves. Terms and conditions of liquidation may be required depending on the asset used for reserves.

  **Assets Requiring Liquidation
  The following may be counted as cash assets at 100% of verified liquidated amounts:

  • Cash value of life insurance
  • Publically traded stocks
  • Bonds
  • Mutual Funds
  • U.S. Government Securities
  • Savings Bonds
  • Retirement Funds
• Gift Funds - Primary Residence and Second Home ONLY

Maximum Loan Limit Look up for your area can be found here;

Look Up Conforming Limits For Your Area!

Fannie Mae's Requirement for 1-4 Mortgaged Properties.

Fannie Mae's Requirements for 5-10 Mortgaged Investment Properties

Freddie Mac Requirements for 1-6 Mortgaged Properties.

@Reggie Rearden

If it is interest only the principal will only get paid down if you pay additional money every month towards that balance. 
you only pay interest on the current balance. So yes, the higher the amount withdrawn, the higher the payment will be. 
also if it is a 5 year term what is your plan in 5 years?
This is risky in my opinion, - an interest only loan, that come due in 5 years. What if they reassess the value lower in 5 years, and you only paid interest payments? You will now have to pay the difference in the refinance as well as the cost of the refinance! What if you don’t have the funds to do it? 
Why not go conventional on the multi-family purchase and get a fixed interest rate over 30 years?

@DeMario Drummond

If you plan on occupying the property, why not do a renovation loan? There are many out there, Both Conventional and FHA. Depending on the condition of the property and what you plan to renovate - will determine what type of loan to go for.

@Steven E.

Welcome!
VA you are always required to house hack and live in the property for a year - or at least plan too. It is a primary residence loan only.

Are you planning to purchase a Multi-family? With VA, you are required to have 2 years experience as a landlord or you can't count rental income. This means you would have to qualify on your income only for the loan. Other than that VA is a really great product! You can get into a property with very little out of pocket costs and no mortgage insurance! Let me know if you have questions!

@Steve Shupe

Do you have equity in your primary residence or any of your investment properties? 
If so, you can pull out up to a 75% LTV on an investment SFR property and up to 70% on a MFR investment property, with conventional.