No Money Down

If you search enough (lenders, private money, or mortgage brokers) you can find some that will help you do deals with no money down. You can also do cashout refinances with your properties that you haven’t owned for 12 months or more. Most lenders won’t use the appraisal value for refinances unless you’ve owned the property for over a year (or pretty close to it). The key is to find a good loan officer (sometimes the company makes no difference…it’s the loan officer that knows how to take care of their client). Either that or find someone or a lender that can give you money directly. Loan officers tend to have multiple resources and can help you get approved where you may be declined if you tried yourself.

I found a lender that would do “no money down” but I got crushed on finance charges. I did an 80/20 loan, paying 3K finance for each one, plus got horrible interest rates. I would have been much better off paying the 3K on one loan and putting 5K down. I would have had and extra 2K out of pocket, but at least the money would be in equity instead of in the mortgage brokers pocket. Is the normal, or did I just get screwed? I’m running out of money to close on more properties, so I have to figure something out. I can’t afford to keep spending 6-7 K for each place before fixup even begins.

Just scored 100% financing on a condo in Las Vegas with Countrywide
Retail Division…The loan officer works directly for countrywide…not a loan broker. The FICA score must be good and I got a rate quote of Prime plus 3%. The best part it is a Low Doc loan. Must show 6 months reserve in checking account during the 60 day escrow period.

Well, I definitely don’t consider myself an expert on RE investing. But I’ve had pretty good luck with the whole rehab thing. That’s really all I even talk about on this forum, cause it’s the only thing I understand concretely. Sub2 and all that high speed talk gets me confused.

Anyways, I was fortunate enough to discover a bank here in Nashville that loans me 100% financing at 80% ARV at 6.25 percent, with no prepayment penalty and no downpayment. This means I can buy a house without a downpayment and walk away from closing with repair money in escrow. The only risk is that it’s one year interest-only. I know that this isn’t the only bank or HML doing this. There are some advertised on this website under “resources”. I mention this only to encourage other people who are discouraged about starting because they can’t find the funds. Just go to a mortgage broker that deals with RE investors and tell them what you’re looking for. Good luck.

I found a lender who did a 95% (of appraised value, not purchase price) investor loan, 2/28, 2 year soft prepay, 1% orig fee, 680 FICO, 7%. It allowed me to sell 4 new homes using the appraised value not the discounted purchase price. By example, listing price was $293 207, discount of $43 207, purchase price $250 000, 95% mortgage on appraised value of $293 207 equals $278 547, closing costs of approx $5 000, cash paid out to purchaser at closing of $23 000.

If anyone is interested I have just been given 5 more new homes. All homes are by leading ne w home builders in the Denver Metro area with comps available to validate appraisal.

Mr. Fancypants.

Could you sheld a little more light on your 100% @ 80% ARV loan. I am just not that familar with the terms of the loans. If you could put some numbers in an example form as well, I would appreciate it.



In order to get 100% on the 80%ARV goes like this, asking price is 100k, the ARV (after repair value) is 120k, now take the 80% of the 120k which is 96k, now subtract any repair cost, lets say 20k, so minus the 20k from the 96k which is 76k, that is the most you want to offer the seller and still have repair funds, all at 100%.

What I do to keep the numbers easy is just multiply the comp average (FMV) price by 80% (.80). This gives me the maximum amount the house must appraise for and that I can secure a loan for. Deduct the sale price and you’re left with the amount you can use for repairs. If the numbers don’t work, just scrap the deal and move on.

buckeye58: did you end up with any equity in the property? If you did with no money out of your pocket…depending on how much equity (hopefully at least 10%)…then you’re okay.

Ross eRealEstate: is this a nationwide lender or just in your state? Would you be willing to refer us to the lender?

JoeDC: 80% ARV - lender finances the purchase price, repair costs, and closing costs in one loan if they all fit within 80% of the “after repair value.” If the sales price is $60K, repair costs - $10K and closing costs - $5K…ARV appraisal (or “subject to”) is $100K…then your maximum loan amount could be $80K…on this particular example, you only need a $75K loan…which fits the 80% ARV.

MAO (Maximum Allowable Offer) = (ARV X 80%) - (repairs + closing costs)

Try that formula so you don’t confuse yourself. First you must find out what the property may appraise for. Then you find out the maximum loan amount that rehab lenders will allow (80% of the value)…then you minus the repairs and closing costs. The answer to this equation is the “maximum” offer you should make on the property. (Hope this helps! Just multiple ways of explaining the same thing.)

Do you consider realtor fees part of closing costs? Thats like 6% of the sales price right there. Or are the realtors fees taken from the 20% discount on the FMV?

The real estate broker fees are generally not considered part of your calculations. Typically, the seller pays this to their listing brokerage and that brokerage agrees to pay your agent’s broker (selling agent/buyer’s agent - same thing), if any. That is unless you’re not from Texas…then I don’t know how most deals in your state are done but if you post it (the way it works in your state - and of course what state you’re from), I’m sure someone on this board will have the answer for you.

I realize that is the case while purchasing the property. What I was curious is about when it comes time to sell that property. If you are doing a rehab to sell where do you account for the realtors fees for the sale? Does that come out of the 20% when using the equation listed earlier?

No because that’s after the fact. If you intend to sell the property, that’s after the closing for the loan when you buy the property. That fee that you pay a listing agent has nothing to do with the loan. It simply reduces your capital gains by whatever you agree to pay the listing agent. I hope that answers your question.

Sorry, I guess I am having trouble asking the question.
MAO (Maximum Allowable Offer) = (ARV X 80%) - (repairs + closing costs)

If you use the above equation to determine the max offer for a rehab that you will flip after fixing where do you account for the costs to sell it after repair? I am not talking about a loan.

When I am evaluation a property for rehab/flip. Where should I account for the brokers fees when it comes time to sell. Let me give an example to illustrate.

ARV 100k
Repairs 10K
Closing cost 2K
So in the above equation I would offer 80K-12K= 68k MAO

So if everything went according to the above estimates I would be listing the property for 100K and I have 80K into the property. When it sells I make 100K - 6K (6% realtors fees) - 80K = 14K . is that correct? So in general people don’t account for the cost to sell the house when they determiine MAO using he above formula.

No problem. That is completely up to you. You can count it in the 80% or the 20%. It depends on what you would be happy with when selling the property. Do you want to earn 20% in capital gains or 14% (this is assuming that you agree to pay a 6% listing fee). If you want 20% then your MAO is (ValueX80%) - (Sales Price+Repair Costs+Closing Costs+Listing Costs). If anything, you could also try to sell the property as a FSBO. You could save yourself at least half of the listing fee you would pay the agent or maybe the whole thing if you find the buyer yourself. Another option would be to do a lease option. It just depends on what you want to do.

Can someone please tell me what a

“2/28, 2 year soft prepay…”

is (from above)?

2/28 - an ARM (adjustable rate mortgage) that is fixed for the first 2 years and then converts into an adjustable rate for the duration of the loan. A soft prepay, whether 2 years or whatever the lender requires, is a prepayment penalty only if you refinance the loan…you can sell anytime during the loan. A hard prepayment penalty, typically called a prepayment penalty, is one that has a period in which you cannot refinance, sell the property or payoff the loan until the specified term has matured. If the loan is paid off in any way during the prepayment period, you will be penalized.

Hi, what if i have 8 months reserve in my stockbroker account, does that count?



Poor semantics on my part. I did end up w/ good equity, but my deal was “no down payment”, not “no money out of pocket”. I paid about 6K out of pocket, it was just all in closing costs to my ripoff mortgage company. My problem is, I’ve paid (for two properties) about 20K out of pocket - 8-9K in closing costs, 4K down payment (on the 2nd property), and the rest in fix-up. I now need to find no money out of pocket deals or a flip or two to put some $ back in my pocket or I’m at a standstill. I don’t have the money to keep paying this much out of pocket expense.

Any advice?



Steve (and anyone that wants what Steve is asking for),

Very true…a lot of times people say you can get no down payment. It doesn’t mean no money out of pocket unless the specify that. Yes some brokers will say they can get you a better rate…but what is it really going to cost? My first advice is to seek a broker, or a loan officer (sometimes brokers aren’t willing to help or give the service that a loan officer could) that is honest and is easy to keep in touch with. I do know how to get this kind of financing in Texas because it is my home state and I have the right connections. What you’re looking for is a loan that will finance your purchase price, repair costs and closing costs without hard money terms (higher rates, higher origination points, etc.). Please contact me via email: I’d like to speak with you in person.