All Forum Posts by: Jerry Padilla

@Jason Kim You would be putting down 3%. 97% will be financed. 

Investor Friendly Lender Offering a Wide Range of Products from Beginners that are "House Hacking" to the experienced investor. We have both conventional and portfolio products for residential property.

Interested in Conventional Financing?

Conventional Investment Property Financing

Interested in starting out with "House Hacking" Here are some blogs, on comparing the difference in Home Possible, & Home Ready, as well as info on FHA Financing.

House Hacking: Home Ready vs Home Possible

House Hacking with FHA Financing

Interested in using the "BRRR method" and coming out with as little out of pocket expenses? Here is some info on Cash Out Financing & Delayed Financing.

BRRR; Cash Out Financing & Delayed Financing

BRRR - What You Need To Know When Using The BRRR Method Podcast

Interested in Rate & Term Refinancing One or Multiple Properties at a time? Here is some info on Rate & Term Refinancing

Rate & Term Refinancing Properties 1-10

Interested in Renovation Loans? These are just for the beginning investor that owns less than 4 financed properties including subject. This is NOT for fix and flip properties that you intend to sell. Here are several loan products for renovating properties.

FHA 203k vs HomeStyle vs EZ - C Renovation Loans

Interested in VA Financing?

House Hacking with a VA Mortgage

VA IRRL

VA Renovation Loans

Portfolio Option for over 10 financed properties;

Portfolio Loans - When Over 10 Financed

Product Overview

• Combines home purchase or refinance (limited cash out) with home improvement financing in one loan with one closing
• Provides a convenient way for borrowers to make renovations, repairs, or improvements totaling up to 75% of the "as-completed" appraised value of the property with a first mortgage, rather than a second mortgage, HELOC, or other more costly financing method.
• Funds can be used for repairs or renovations that are permanently affixed and add value to the property.
• Primary residences as well as second homes and investment properties are eligible.
• Maximum of 4 financed properties including subject property, on second homes and investment properties. No limit on primary residences.
• NO MOBILE/MANUFACTURED HOMES

BOND/DPA NOT ALLOWED EXCEPT COMMUNITY SECOND DPA UP TO 100% CLTV.

Required LTV's:

Primary Homes:

-1-4 Units

-620 FICO Minimum (660 High Balance)

-97% LTV 1 Unit with standard conforming only and buyer must be a first time home buyer, or a limited cash out refinance (high balance and buyers that are not considered a first time home buyer - 95% max LTV)

-85% LTV 2 Unit

-75% LTV 3-4 Unit

- Minimum 620 Credit score

-2-4 units require 6 months reserves

Second Homes

-1 Unit - 90% LTV

- 620 FICO Minimum

- Minimum 2 months reserves

Investment Properties:

-1 Unit - 85% LTV Purchase Only (75% LTV Limited Cash Out)

- 620 FICO Minimum

- Minimum 6 months reserves

- Minimum $50k loan amount

-2-4 Unit Investment Properties - NOT ALLOWED WITH THIS PRODUCT!

Allowable Repairs or Renovations

• Funds can be used for any repairs or renovations that are permanently affixed and add value to the property.
• Allowable repairs or renovations include, but are not limited to:
  • Installation of an “in-ground” swimming pool
    • Outdoor living areas are also eligible along with the pool installation
  • Subject property cannot be an unfinished model home or unfinished new construction.
  • Kitchen appliances (i.e. cooktop/ovens/stove/refrigerator/dishwasher) may be included only as built-in fixtures (attached to property - cannot be removed) in connection with a total kitchen renovation that includes new cabinetry and countertops. Eligibility will be determined by the Renovation Department on a case-by-case basis. Washers and dryers are not included - no exceptions.

-Properties requiring foundation or structural repairs require a foundation or structural report from a licensed engineer. Some examples include but are not limited to additional square footage being added, garage additions with new foundations, cracks or settlement.

Renovation Cost Limits

• The cost of renovations is limited to 75% of the “as-completed value” of the property*.
  • No exceptions. This is a Fannie Mae requirement. These limits include the 10% contingency reserve IF FINANCED and all fees/costs listed below in the Fees section. Note: If the cost of renovations exceeds the maximum, the Borrower is NOT allowed to pay the difference at closing from their own funds. However, Contingency funds CAN be paid out of pocket. Any borrower funded contingency that is not used to complete the project will be refunded back to the borrower.
• Projects that include Structural Repairs or Adding Square Footage MUST have a Structural Engineers Report.

• Contingency Reserve

• A contingency reserve equal to 10% (or may be higher depending on scope of work) of the total costs of the repairs and renovation work must be established and funded for all mortgages to cover required unforeseen repairs or deficiencies that are discovered during the renovation.
  • 20% contingency reserve required when property needs structural repairs, or where utilities are turned off.

Fees for Renovation loan

• Single Fee: $900

Contractor Validation

• Contractor is selected by the borrower and approved by the lender
• Contractor validation will be completed by the Renovation Department.
• Maximum of three (3) contractors
• General Contractor is preferred but not required
• Follow state and local requirements for licensing of contractor(s). If a general contractor is not licensed for work that requires a license (i.e. plumbing, electrical, HVAC, etc.) obtain:
  • proof of the general contractor's liability insurance coverage of at least 2 times the total bid, OR
  • the license of the sub-contractor completing the work.
• “Do-It-Yourself” Projects are NOT acceptable even if the Borrower is a licensed contractor.
• Contractor on the project CANNOT be one of the following. (NO EXCEPTIONS):
  • Borrower
  • Borrower's employer
  • Members of Borrower's family
  • Seller
  • Realtor involved in transaction
  • Loan Officer involved in transaction

Draw Information and Process

FEEL FREE TO PM ME WITH ANY QUESTIONS OR ASSISTANCE!

@Jason Kim

It is best to reach out to your county and ask if they accept traditional financing. As far as actually financing, there are renovation loans that you would be able to use. HomeStyle is a great renovation product. Depending on how many units the property is will determine your down payment. Even if the property looks great to you, if there are issues noted by the appraiser than a renovation loan will allow you to put those costs into the loan and go through with financing, as the county will most likely not do any repairs.

Here are the down payment requirements for HomeStyle:

-97% LTV 1 Unit with standard conforming only and buyer must be a first time home buyer (high balance and buyers that are not considered a first time home buyer - 95% max LTV)

-85% LTV 2 Unit

-75% LTV 3-4 Unit

@Christine G.

I agree as well with the other lenders. You don't want to commit mortgage fraud. If you live and work in Texas, you can't have a primary residence in Massachusetts. To cash out refinance as an investment property, a SFR you will be able to go up to an LTV of 75% and an LTV of 70% on a MFR. You will have a higher interest rate, but if you are able to cash out enough equity to purchase another investment property, than the higher interest may very well be worth the income that you are bringing in on an additional property.

 Aaron,

The standard requirement for cash out is 6 months for both Fannie Mae and Freddie Mac. If a lender indicates anything different then it would be a company overlay.

Hope this help you.

@Andrew David

Exactly as @Brie Schmidt stated. It is considered a residential property and can be financed the conventional route. You can typically use commercial financing on residential properties - the rates and terms won't be as good as conventional financing. 

For cash out financing on a 4 unit with conventional you are looking at an LTV of 70%. The 75% LTV is for purchase financing of a multi-family residence.

@Andrew Postell

This was a great post!

@Nick Brubaker

If you are considering a career change, for conventional financing you will need to show a 2 year work history, so it may be a good time to pull the cash out now if you may need it. For a new primary residence you may end up going the portfolio route if you purchase in that 2 year period. 

@Rebecca Wisner

Even prior to 6 months you go according to appraised value. You are capped out at a maximum of pulling out your initial cost on the closing statement - purchase price plus rehab - if on the closing documents and escrowed.