I am self employed. My credit score is 770+. I would like to purchase a rental property but can only put 5% down. I want to go stated income. Does a program exist for me? What rates can I expect from a hard money lender in this situation? Thanks in advance.
if you only have 5% down then stated income is not available to you. Stated income is currently capped at 70-75% LTV depending on the lender. At the end of this year stated income will be gone. Fannie/Freddie have said they will stop buying ALT-A loans at the end of the year. Why do you need to go stated?
Chris is right about the stated programs. Hopefully some other stated options will open up to replace these. What state are you in and what city are you looking to purchase in?
The HML option wont work for rental properties because these are normally short term loans. You’d have to refi and run into the same problem as above.
The other option would be discussing with local bank. They commercial bankers that might have options for you. If you’re buying significantly below market value then a HML option with local commercial bank refi may work out.
You should find a mortgage professional who specializes in investment loans like these to go over your options in detail.
Conventional will be tough. But if you find the right deal, you can use private or hard money. You may have to compromise on the points, rate and term but you just have to find the right deal to offset that. I know a few hard money investors and cashflow properties with enough equity and cashflow for them to make sense. Once you own the property for 6 months your refi options are much better. Hopefully soon there will be many more stated loans, blanket loans and other loans for strong properties and buyers to utilize. Good financing is out there, just have to find it. Forums and real estate clubs are good ways to network and find what you are looking for.
You may be able to find a seller that would do a lease option, land contract or owner finance until you can refi. If you buy it at the right price, you may be able to get a cash out refi and still have positive cashflow. Then you’ll have the down payment money to invest in another property.