Loan for Rental Property

Pretty new to all of this… What is the best type of loan to get if I want to get into some rental properties? I have a credit score of about 640 with a few things that are in collection agencies, and little to nothing to put down…

Thanks in advance

If you are willing to pay off the collections at closing, you may qualify for tradional 100% investment property financing, but the payoff of the collections will likely be a condition for approval.

If you are saying 100% non-owner occupied investment loans, please share via email. I have only found lenders for singles and doubles. I have yet to find a 100% non-owner occupied 4+unit lender yet.

5+ units is in the commercial arena and that is unlikely to find a 100% loan and there are commecial lender that you allow for seller carry backs though.

Yes 100% NOO loans do exists for 1-4 units

The lenders I’ve worked with in the Cleveland Metro area, consider 4 suiters here commercial property and they will not finance “owner occuped” on a 4 suiter. Most of the larger lenders here in Cleveland do not allow “seller carryback” because Cleveland has a strict “predatory lending” law. And, the banks are looking for credit worthy individuals to “put up a portion” of their own, saved money. The problem that Cleveland and surrounding areas have is that the buyer never pays the “seller carryback” to satisfy their note or also known as “second mortgage.” This also prevents the buyer from obtaining a “true” second mortgage should they need to get equity out of property - they’d have to pay the original seller off to get any remaining dollars.

In addition, a few of the lenders I’ve worked with want to see the “advertised price” on MLS. Some have actually tried to require a seller to actually list the selling price on MLS at the buyers expense to substantiate the fact that the price “was not marked up” to afford the kickback. In this case there are many For Sale By Owners who WILL NOT approve of the MLS listing because Real Estate Agents will start hounding them and not only that, if the house doesn’t sell to the original buyer, their home has been listed and again, they are still solicited by realtors. So there were 2 deals that fell threw because the sellers wouldn’t list the price on MLS to accomodate the buyers mortgage broker/lender.

Had pretty good luck with Coldwell Banker (oops, not sure if I am supposed to name names)… They did a 5% down, and have been very happy with taking care of me in TX

Valley Cap

valley cap was that a 95% 4 unit or was that with 5+ units

because getting a 5% down on a 4 plex is easy

Just want some clarification

Just jumping into this discussion becuase I have been looking for financing on a 3 family…and everyone seems to want 20% down (based on Fannie Mae guidelines). I have only talked to a couple mortgage brokers who are willing to take 10% down, but the rates seem high. I want to tie up as little of our capital as possible so we can keep investing in RE.

Any suggestions. We have great credit, low debt, would go stated…6 years professional work history, steady income, some assets and own our primary residence.

Any idea what rates and terms we should be expecting. I was floored by what the brokers keep telling me. I guess I bought into the No Money Down idea…but it dosen’t seem to work in the real world.

You are looking at pretty high rates, but can borrow 100% through a few lenders. Will probably be in the low 7’s on the 1st ( no points ) and 12-13% on 2nd, that is stated income. You can do a lot with points to buy down the rate with at least one of the lenders I know of.

My Wells Fargo guy does 10% down on non-owner occupied one, two and three family non owner occupied. They do 10% on most non owner occupied non-commercial property.


What kind of rates does your lender offer? Would you mind sharing thier contact information.


My Wells Fargo guy does 10% down on non-owner occupied one, two and three family non owner occupied. They do 10% on most non owner occupied non-commercial property.

Same thing they told me.

Yeah, 5% down was for 4 units



To Travis: I would suggest of course 100% financing for your investment properties, and perhaps interest only as well to keep more cash flow. Because you have a 640 mid, you would be in pretty good shape for this type of loan (even if you had to do a stated income loan). I would also suggest splitting your mortgage into an 80% first and 20% second to avoid MI. There are other benefits to this as well such as getting to have two tax write-offs. There is as was mentioned before 100% financing for NOO loans for 1-4 units.

Best of luck to you!

actually the rates aren’t too bad for a NOO 100% stated just as an example 6.125 par first, 2nds is a little high…11.25 par…blended rate…7.25

that is what i am getting. I am doing an 80/20 with 6.8% and 11.125% respectively. If i have 200,000, then what is my blended rate?

6.8% 1st, 11.125 2nd = 7.6 % blended

thank you. That works great for me.

Well then use a lender that doe not use Fredie or Fannies guidlines and get a 90-100% deal for a 1-4 units depending on credit

If you do not have the credit or you want to benefit from a lower LTV rate and still get a 100% No money deal tehn use a broker that understand grant programs and get in the deal using OPM

It is easier then ever to get in an investment deal with no money down then ever

NOW to do it your knowlegable investment mortgage broker must know what lenders to use and which ones that alow no seasing of funds and the seller agrees to pay for the grant and TAH DAH you got a 90% LTV loan with no money down