I was told there are no places to go for 100% financing on rental units anymore? Is that true?
Not true. There are still companies out there that do 100% financing, but you have to go full doc. No more stated 100% NOO.
Thats not true at all Chris. There are a few lenders that do stated to 100% with a 680 score on investmen properties. There are lenders that do full doc to 100% with a 660 score on investment properties. These lenders do exist, you just have to know your lenders.
Actually you can still go stated income 100% LTV NOO witha 660 FICO Negative cashflow is not a problem.
As previously mentioned it is possible to still get 100% financing for stated income on investment properties with a credit score of 660, 95% with a score of 640.
However, what you need to know is that many of the 100% lenders will have restrictions on “negative cash flow”. Even though this is a “stated” program, some lenders will require an operating income statement to be provided by the appraiser. What this shows is what the market rents are versus actual rents. It will also show the expeses of the property, maintanance, taxes, etc. The lender also considers a vacancy factor. All these considerations are factored in to come up with your “net rental income” on that property. They will then compare the net income against what your mortgage payment is. Negative cash flow is generally not acceptable without having verifiable assets, sometimes up to 12 months. This is not every lender, but the majority.
One thing that I’ve found is that most investors who want 100% financing will only be holding the property short term (1-3) months. The majority of the time the property is vacant as well. If the property is vacant, that may automatically generate a negative cash flow as mentioned above. Also, the length of time you plan to hold could be a factor in determining which lender and what your rates/costs will be.
So yes, it is possible. I recommend having a consultation with a mortgage consultant so that all the appropriate information can be determined upfront before issuing a preapproval.
I stand corrected. That is what I get for opening my mouth. All the lenders that I use have stopped the 100% stated NOO. However, on the flip side here in Texas land is still relatiuvely inexpensive so th negative operating income is not usually a factor.
Good point Chris.
If you are buying properties below market value then there may not be an issue with negative cash flow if the lender has a restriction.
Also it should be noted that most of these 100% loans have to be split into a first and second combo. The 2nd mortgages have much higher costs by these lenders.
Not to be a thorn but I jusst closed a NOO 100% stated in TX 1st was 7.8 1 2nd was 11.35 no points paid on 2nd. I think that’s fairly good.
Sounds kind of high on the first though.
I was quoting what a loan I did was…I alread know the scenerio of what I closed…
You do. The other investors who are looking for advice don’t.
So when you throw that out there investors will presume that they too can get those rates.
What they may not realize is that not every loan or client is the same. What if they read this and have a 660 score but your client had a 680,700, etc…rates are diferrent, pricing’s different. What if they had just recently acquired several properties and are maybe limited to certain lenders; well then, those rates may not be available.
Is that a 30yr rate, 5yr rate, 3 yr rate…does it have a prepay? What if you charged 3 points on the first to get that rate? You probably didn’t, but who knows, any of that. Like you said, you do, but no one else is aware what that scenario was.
In my opinion, it just confuses clients (or forum readers) to discuss terms without knowing their goals and qualifications.
I’ve posted them myself in the past too but have tried to not make it the norm as you mentioned.
fine I would love to share the scenerio
660 MID FICO
250 loan amt
30 yr I/O FIXED