All Forum Posts by: Shaun Weekes

Here is how Fannie Mae looks at ADU's. They will only lend on one unit dwellings so if you have a 2 to 4 unit property you'll have to use a portfolio, commercial or private lender.

I hope this helps and have a good one.

https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B4-Underwriting-Property/Chapter-B4-1-Appraisal-Requirements/Section-B4-1-3-Appraisal-Report-Assessment/1736875861/B4-1-3-05-Improvements-Section-of-the-Appraisal-Report-10-24-2016.htm

They are not shut out, but they cannot use the rental income to qualify if they do not have a mortgage.
Example: This example is only for someone who does not own a property. If you own a primary but you are a first-time investment buyer, you can qualify using rents.

Mr. Edwards makes 5K per month or 60K per year. He rents which is 2k per month and no other debt. His DTI is now at 40% which is exceptionally low. Let us say he wants to buy a property that rents for 1.5K and has a monthly payment on that new home of 1k.

In the past he could use 75% of that 1.5K to help qualify which would be $1,125.00 added to his 5K monthly. $3k/6.125K = 48.9% which is acceptable with the correct C.I.A. (Credit, Income and Assets)

Now he won't qualify (Under Fannie Mae Guidelines) because his DTI will 60% and he will have to find a portfolio or private lender.

There ARE some exceptions to this rule and the direct link is attached.

I want to be clear that this is for rental income use.  If Mr. Edwards makes 20K per month then he would qualify because he doesn't need the rental income to qualify.

https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B3-Underwriting-Borrowers/Chapter-B3-3-Income-Assessment/Section-B3-3-1-Employment-and-Other-Sources-of-Income/1736864771/B3-3-1-08-Rental-Income-02-05-2020.htm

Starting April 1st Fannie changed their guidelines on landlord experience. You are now required to have 1 year of landlord experience or property management experience. I guess asking for 12 months of cancelled checks would prove this but so would a CPA letter stating that you've rented the property out for at least 12 months or your last Sch E showing 365 Fair rental days. There are so many ways to prove this, but I would personally only ask for this information if it was the last resort.

I hope this helps and have a good one.

As long as you purchased with your own cash you should be fine for delayed financing. For an SFR you're looking at 70% LTV before the six month period.

I would personally look for a Loan Officer that has experience in this arena. 

 Give us some more details like how much paid for the home, amount owed or did you pay cash, how long have you owned it for and what type of property is it.

@Alfredo Coria

What city in the IE?

If the home is an SFR and you've owned it for at least 6 months and your C.I.A. (Credit, Income and Assets) is good you will be able to get up to 75% LTV on the 470K which is 352.5K. After fee etc. you'll have a little less but that shouldn't be an issue. Because you own the home free and clear you have a lot of options. If the million-dollar purchase is a buy and hold I would strongly recommend doing a cash out refinance. HELOC's should only be used if they're going to be paid back within a 12-month period because of the interest only payment. Also, a cash out refinance will have a fixed rate for 30 years and your rent from the property should still cover the homes new mortgage.

Make sure to use a Broker or Loan officer that has experience calculating income for clients with multiple homes so there's no surprises at the 11th hour.

Good luck and have a good one.

@Bryan Acciani

Your best bet at this point is some type of commercial loan. They will base the loan on your rents. You have a lot of equity so that works in your favor.

I hope this helps and have a good one.

It looks like the FL property is going to be your best option for a cash out refinance. If it's an SFR you can borrow up to 75% using a Fannie or Freddie backed loan which would give you approximately $221,250 based on your numbers. That should give you approximately 67.5K without fees. If you don't need that much do the loan at 70% which would give you a better rate and term and a total loan amount of approximately $206,500 which means 52K without fees. If your C.I.A. (Credit, Income and Assets) is good you should be just fine moving forward. Look for a great Broker or Loan officer that has experience with investment loans to sure up any lose ends.

Take care and have a good one.

@Honey Fender

As long as you can prove that she has made the mortgage payment the last 12 months this shouldn't be an issue. Look around for a Broker or Loan Officer to help you.