100% financing on loan under 50k

We purchase some great deals on sfhomes for rentals that are under 50,000. the only bad thing about the cheap deal is that no one will finance them for 100%. we always pay 10% out of pocket. anyone have a lender that will do exception loans to that…without huge fees?

Howdy Kr1127:

I just placed at ad in the classified section for the same type loans. So far I have had to resort to individual lenders. I am paying 12% interest and 4 to 5 points. I gave up on conventional lenders less than $50k and my loans are in the $20K to $35K range and rent for $500 to $600 per month. I even asked for a package deal of 3 or 4 at a time. Maybe a local small bank would do the deals. My credit score is too low as I can not even borrow against my own CD from Bank One or Wells Fargo.

What kind of credit score would you need and what kind of debt/income ratio could come into play?


Howdy Naperbill:

Who is your question too? Actually we are both looking for lenders and the meaning of your question is unclear?

A little vague…sorry. I was curious about what type of credit scores and debt/income ratio would be needed to put together a deal like that. I’ve got my eye on similar properties and the only way I am looking at financing them now is with a heloc and then transferring to a conventional loan. I’d prefer saving my heloc for repairs.

Any insights??


Hi gentlemen. I was reading your post and wanted to try to help you out. I will ask my Underwriter tomorrow about our minimum loan amounts for 100% financing. If you’re looking to hold these then private financing can be expensive, so if I can help I will be more than happy to. Keep an eye on this post Wednesday and I will let you know what I can do to help you all out.

we do the exact same thing, we have found a few great steals around35,000 that still rent for between 550-650 anda the cashflow is so good that we hate to pass up these houses, but having to keep paying out of pocket is killing us. great in the long run, but not good for buying alot fast. we both have credit scores over 700 and no problems getting any other loans, but this is tough. we tried small banks also, but no-go around here. thanks for all the responses, i have gotten a few leads from emails. i will follow up and post what i find out.

It appears as though we can lend 100% as low as 35k.

If anyone has a specific scenario they want to run by me then please email me and I will contact you. I have never done 100% on a loan amount this low, but our guidelines allow for it so let’s give it a shot.

Mortgage Mark, would you provide 100% to someone with a bankruptcy within the last year? Needless to say our credit score is shot, but I would like to get a feel for getting a loan on an investment property?

I would appreciate your feedback…thanks,

anxious beginner :-[

Unfortunately not 100% with a BK and a low credit score. On small loans like these we would need a 680 credit score or higher. If your BK is outside of 2 years and your credit score is above 560-580 you might be able to qualify with a sub-prime lender for 100%, but that would be a primary home, not an investment property. Sorry to give you bad news. If you are looking to flip properties you may want to connect with a local hard money lender to help finance your properties.

Ted what do you find expenses to be on these properties? If you have a 35000 property that rents for 600 per month. Your mortgage payment is in the high 200’s then you got taxes insurance etc.,etc. What do you generally figure for maintenance per month as a percentage of the gross income? At what cap rate do you like to have?

It appears as though we can lend 100% as low as 35k.

Mark, so based on what you are saying… 100% Investment with a 680+ credit score is available. If you do not mind I was wondering with what lender you are getting this. My broker has been having difficulty finding Lenders to do this.

Mark is a direct lender. Charter funding is basically the retail operations of First Magnus. First Magnus acts as a superbroker that does business with 100s of lenders. Because of the volume they do they get small discounts in pricing and are able to underwrite the loans. The loan programs they have should be no different than what a normal broker has access. However, as a direct lender, as Mark notes, they can apparently write paper in their own name which allows them to change guidelines on some things. Mark correct be if I’m wrong but I think this is what we discussed in another thread you posted on.

I used to work for a mortgage banker and the same thing applied there. Although they did not look favorably about writing notes that would be hard to sell on the seconary market.

There are several noncoforming lenders that will do 1 single loan at 100%. Most of them require full documenation with a score of 680+. Miniumum loan size generally $50-$75k. So Mark having the ability to do $35k is very unique. Remember too that most of these lenders will have prepayment penalties that you can buy out of. If you can buy out, they charge like 3 points.

I have 2 ways of setting my clients up with lower purchases. If they are planning to hold the property for rental (and not refinancing for cash out withing the first couple years) then I would try to use one of the above methods if it fits the criteria.

For properties that are being purchased well below market value and that don not fit the criteria above, I usually have a private investor fund the transaction. Costs is usually 4-5 points. The investor must refinance out of this loan within 30 days. Now with the refinance, we are able to use a conventional lender. Because there is no seasoning, the loan can be based off the higher “true” value and not the lesser sales price. LTV guidelines would allow for a lower loan at 70-80% and cash out may be available.

In the case that a client was not holding long term and wanted to sell immediately the structure may change a bit.

Ben, we did discuss this in future topics. You are correct about my company.

Keep in mind I said the guidelines allow for low loan amounts and I have some flexibility with my UW, but I can’t guarentee an approval. I am willing to work these loans for any investors who are interested.

Ben is also correct about the way around this format (which I personally prefer) by using a HML to secure the purchase and flipping into conventional a little later. This eliminates any questions about approval and will guarentee you can purchase your home.

Either way these loans can be done for little or no money out of pocket in many cases.

What site has these rental properties for sale under $50k?

there’s no site, we have just found some unlisted/bank short sale properties and got them cheap.