If you want to invest in 5 properties in a range of 4 months. Would it be possible to get 100% loans on them. The reason I ask is because I hear from other investors that they have done it without any cash. Is this true? Supposing you have a 700 credit score and stated income. Any comments??
100% financing is possible; however there are other factors involved. You mention that you want to go stated income. Are you self-employed? Do you have money in the bank or in retirement accounts that can be used to show reserves? Do you own your home at the current time? Do you have previous landlord experience? You will have to answer questions like this when you sit down with a mortgage professional. Multiple 100% LTV loans are available, but as you will learn from reading on this site, the rates that go along with financing of that type can really eat into your cash flow.
I am self-employed. I got reserves in the bank and previous experience in landlording. I also own two rentals for a couple of years. Now, my question is what would you recomend I do? 1)Do 100% loans and not use my cash, well only for closing costs. or 2) get 90%-95% loans and get a better rate.
forgot, I also own my current home.
There are MANY questions that need to be asked of investors to determine what financing options are available.
You’ll really need to evaluate your goals. Although putting down 10% may reduce your cash flow, it may prevent you from reaching your immediatel goal. Acquiring 5 properties in a 4 month period.
Remember that there are several types of financing options available for investment properties. One of these options would be conforming conventional loans. These are the standard Fannie Mae and Freddie Mac backed loans. The highest ltv available for stated income is 90% on a single family. Generally you need a score of 720+. This loan would have pmi because it is over 80%. Using this program, many lenders will cap you at 4 loans with them and 8-10 total financed properties. So at some point, as your portfolio grows these loans will not be available. You also must be able to qualify under the guidelines for stated. Stated income is not something a broker can just use to make up an income figure to put on the applicaion. Without being coached, you would need to disclose what your gross income is. If the debt to income ratios are too high then you would not qualify. Becareful, a lot of brokers will tell you they can just put whatever, or will just have you sign the loan application they have prepared for you.
In any case, if you hit the max amount of properties or can not qualify for stated income, then there are always portoflo or alt a programs. Under these guidelines investors are able to get 100% finacing, finance an unlimited # of properties, and use no ratio/nina programs. The no ratio program is similar to stated but income is not even disclosed on the loan application, thus, no debt to income ratios are calculated. A great program for individuals who have many properties or highly affective accountants.
As Patrick mentioned, 90% financing would be several hundred dollars less per month if you can qualify for a true stated FNMA loan. If you are using the alt a loans, financing is usually split up into a 1st and 2nd combo. The rate on the first for 90-100% would not differ. On the 2nd it would be a miminal increase. Figure on a 150,000 loan, an extra 10% (bringing you to a total of 100%) would be an exta $150 per month.
If you’re buying these properties well below market value then even doing 100% financing may still yield a payment with your required cash flow.