Financing a Rental

I’m purchasing my first investment. Its a duplex with good rents and i have recieved 100% financing through a Fannie Mae program called the My Community Program. My fico is only a 600. My problem is that i don’t want to do the deal unless i can get a line of credit of at least $10,000 or a second mortgage. My loan officer is telling me that with my fico score, it is pretty much a slim chance that i can get that line of credit. Any suggestions on that?

I am not sure if I am reading this correctly. Correct me if I am wrong.

You are purchasing a duplex, which is an investment property. You have qualified for a loan which is for 100% LTV and you want to add a line of credit.

Without knowing all of the parameters of your situation it is safe to say that with your credit it is not going to happen. To get anything in excess of 100%, even on your primary home, you are going to need your credit to be in at least the high 6’s low 7’s and have solid assets and employment history.


In your defense I am going to guess that you are probably a first time buyer and have heard of things like the line of credit happening and decided to go for it, or someone else who does not know or understand your credit situation is giving you unfounded advice. You are getting a great deal because you are getting 100% loan on an investment property at most likely a very good rate.

What cracks me up is that you are saying you won’t do the deal unless you somehow have access to cash from the property. You would be wise to jump all over this deal before your broker gets tired of dealing with it and fires you.


The bolded not still has me laughing.


What concerns me here for you is the fact that you are using the “My Community Program”. This program is designed only for owner occupied properties. In your comments you note that the “rents” (plural) are good.

If indeed you are not going to live there this would be committing loan fraud as the application is probably being submitted that way. There’s no program for a 600 score on 100% investment loans.

Not trying to bash you, but, this a problem I’m having with some investors…SIMPLY PUT, WE ARE NOT GOING TO COMMIT MORTGAGE FRAUD TO GET YOU A LOAN!!! Overstating income or stating a property is a Primary Residence (WHEN IT IS AN INVESTMENT) is fraud. PERHAPS YOU DON’T CARE IF WE GO TO JAIL. BUT WE DO! If I was your Broker, I would cut my losses, cancel your file, and go work with clients that won’t manipulate me into committing fraud. Don’t hold your breath waiting for a cash back deal either. GET A GRIP…WORK FOR YOUR MONEY INSTEAD OF COMMITTING FRAUD. THAT’S WHY THE INDUSRTY HAS CHANGES SO MUCH OVER THE LAST FEW MONTHS. DO US A FAVOR AND GET OUT OF INVESTING IF YOU ARE GOING TO TAKE BROKERS DOWN. I’M NOT EVEN GOING TO START TELLING YOU ABOUT THE FRAUD YOU ARE COMMITTING WITH THE “MY COMMUNITY PROGRAM”

good advise everyone. i even decided to wait a little while before i read all of the responses. but what i was trying to explain is that i did not want to do the deal without having the cash to float the property due to vacancies. if i don’t have a lot of money saved up, and i bought a property at less than the appraised value is there any way that i could pull out the equity in the property with a credit score of 600? the financing program that i was considering will only give me what i purchase the home for. any suggestions?

If you need the rent from the other unit to qualify then you are buying too expensive of a home. From what it is sounding like you have zero reserves. If this is the case then I would definitely wait before moving forward with the purchase. You should be able to sustain that property on your own or at least have some cash in the bank to rely on if your renter suddenly up and moves out on you. With the scores you posted and the program you are using you will not LEGALLY be able to pull cash out at closing.

thanks for the advice