When using conventional loans, how many rental properties can I buy? I read some investors with excellent credit can get up to about 8 or so properties and have a hard time getting another loan after that. Is this true? If so, any way around this?
Also, if I continue to buy rental properties, is my credit affected negatively with each purchase? My credit is 798 and I don’t want to tarnish it.
My loan officer says 10 total conforming loans. This includes my private residence.
Keith
ur score will go down by inquiries but also with the total debt to income ratio, though real estate doesn’t affect it as much, though the more mortgages, the lower ur score will be. keep that in mind. also, the more time that goes by even with mortgages on ur record the better ur score will be
Have excellent credit is like a sports car. Its meant to be driven (with care) not stored in the garage.
As for getting loans, you can only have 6 loans that are Fannie Mae conforming; beyond that it means your loan originator will either service themselves or sell into the secondary market.
Some banks (BofA, for example) will cut you off at 10; other lenders don’t limits. If you get into that situation, you need to ask your lender if they do “portfolio lending” (i.e. make loans, service them themselves, keep them in house) and about their limits. My recent experience has shown that small local banks are a good place to look for these type of things.
As you get more loans you just pay a little bit more int he rate (1/8 or 1/4%) for non Fannie Mae stuff. Its really not a big deal.
I have 9 loans right now so I have been looking into this.
aak5454, after 9 loans, did your credit score go down?
In the past 5 years my score have bounce between 720 and 780. In that time frame I have originated about 20 loans.
Fannie Mae Regulations cap out at 10 financed properties regardless of occupancy. After that you will have to use Alt A Lenders.
Mortgage and other installment debt (auto loans, student loans…etc) has no negative impact on your credit scores. High unsecured revolving debt and slow payments are the only things that will drag down your scores. DTI ratios have absolutely nothing to do with your credit scores.
Good Luck!
Mike
Aurora will take up to 10 depending on landlord experience. Greenpoint will take up to 20. rates are a bit higher in some cases.
You need to form a corporation and start establishing credit for your corp that way you will not have to personally guareente the loans with your social security number. Let your corp be responsible for the loans. It will take at least 2yrs to get to the point where your company can borrow generally, so start working on it now.
Also when you have several loans, like 10, I know you can roll them into 1 loan, I forgot what it is called, I think a bridge but might be wrong here.
Y,
It is called a blanket loan. Also. can you suggest some lender that will allow LLC purchases? I have many investors who would like to purchase as a corporate entity, but I have not been able to locate a lender that will allow it.
i heard a lender in Fl talk at the boca realestate club, you can find it online in the club listening. His name is Mark with Pinnacle group, I had his biz card but lost it…so get onto their website and you can find it. He mentioned how he will close in an LLC since they are the largest private lender in SouthEast with about $7billion in assets…
thanks for the tip.
I have been quoted numerous times by experienced loan officers the number of 6 as the Fannie Mae limit. I checked the Fannie Mae website, but was not able to find that tidbit of info.
Your credit will alos be dragged down by numerous credit inquiries for new credit; thus if you have to do several loans in a short time, work with one lender.
Debt-to-income may not impact your credit score, but it does impact your ability ot get a loan (unless of course, you are doing no doc which comes with higher interest).
I am rather positive Fannie Mae is max 10 as I had a client with 14 rentals, all mortgaged, and Had a little trouble placing his loan. But their guidelines may have changed. I Ended up using Greenpoint And they will only hold up to one million in paper on any given borrower as is the case with many lenders.
I agree with the Application Process doing the bang up on scores. Credit gets hammered in the loan process due to inquiries alone. And be careful because now many revolving credit issuers are beginning to report balances in real time…when their computer systems update daily they automatically send updated balance info to TU EQFX and EXP. SO things are getting tricky these days.
Kindest regards to all
Mike G.
Weatherstone Mortgage
Thanks for that update Mike. I had that happen to me with a credit card on one of my buyers. Bought something for his rehab property that totaled 30K, and it hit his report almost immediately. Dropped his scores, wrecked his ratios…
Could someone explain to me how the debt to income ratio is calculated? I was always confused with it. Thanks for help
So I guess this rules out shopping for the best interest rates from different lenders, right?
What’s the best way to avoid this problem and still find the best rate?
not so, you just have to go about it the right way.
from my experience trying to get quotes over the interest is a waste of time for investment loans.
you have to call them on the phone and tell them you are THINKING about purchasing a property (even if you already have it under contract ;)). You need to know your FICO score. I always give a range and its best if you quote your middle one. The give them some rough numbers like purchase price, percent down, etc ansd then ask what programs they have available
Couple of key questions beyond the rate is the follwoing:
fees (all of them! be explicit)
pre-pay penalties
ask if they are orginating the loans themselves or are they broking the loan. Also ask whether they doing portfolio lending or do they sell into the secondary market. The reason to ask these questions is to understand whether the person you are talking to is a middle man, a loan officer, or what. If you are going to get a loan that will be sold into the secondary market then you should understand that the broker is getting a wholesale rate and then marks it up with fees, and the rate to make money (thus there may be room to push down on those or get a better deal somewhere else). If its a portfolio loan, then those numbers are a bit more inflexible, but offer the advanatage of lower fees and you are likely dealing with the lending institution directly which can be nice. Brokering situations can be a serious pain in the butt during underwriting, even for well qualified buyers.
Got to run call some lenders to shop for a loan on my lastest project; time to practice what I say!
Do you guys use loan officers, or deal directly with the lenders?
I deal directly with my lender…
Keith