Im a realtor/investor in the Dayton, Ohio area. Im looking for lenders for 1-4 unit properties. Typically im a buy & hold investor. I look for undervalued properties, with immediate cash flow and very little rehab costs. I have mid 650 FICO scores, with a Transunion score of 688. Would like to find 100% financing programs.
You received semi accurate data from Chris. If you are looking for 100% financing from a conventional lender then you’ll need a 720 and full documentation.
Use a seller second to get to 100%. 80% first from a conventional lender, can be done as stated, and no inflated values or throw away 2nds.
Use gift funds from a family member to fund your 5-10% down payment. Your first motgage can be reduced doc.
If you’re buying substantially below market value then you could possibly consider using a hard money lender that charges low points to get into the property, then refi into a conventional long term loan.
Chris, I think you are correct in that too get 100% (conforming) I do in fact need a higher credit score. I can do 5% down, but again dont think I can do so conforming loans, would have to go non-conforming. If you know of a 95%LTV, let me know.
Investment Loans, your advice is also sound and correct. However, in Ohio and especially Southwest Ohio (Dayton area), foreclosures are high, so lenders are really clamping down on seller carries of all kinds. I can still do 90-10 (10% dn from my own funds), problem is, banks want you to have anywhere from 30-90 days seasoning of my own funds to show as dn payment. Now that might be possible on smaller deals (under 50k) for example, but larger deals say around $100,000 thats not possible for me. Another issue arises here, as mortgage companies are shying away from loan amounts under 50k, for some reason that seems to be the magical threshold.
Being a licensed realtor, Im able to charge a commission when I buy, so Im able to put legitimate cash in my pocket. We can be creative and show rents/deposits, which I could use as dn payment money at closing. If I could find an investor that would allow me to have seller carrybacks, I could do those all day long. Ive seen some HML offering anywhere from 65% to 85% LTV or ARV, so hypothetically if I have a purchase contract say for $35,00 and a current appraised value of $55,000 to $60,000, then hypothetically I should be able to borrow $35,000, hence making this a “no money down” deal?
Thanks again for your correspondence, I look forward to further discussions.
I noticed you offer 100% on 1-4 units. Im assuming you allow a 10% seller second? Do u have a minimum-maximum loan amount?? Sounds like we may need to talk more, you may have a couple programs for me, that is if you do business in Ohio.
There are lenders out there that do offer a 95% LTV, but from the small amount of research I have done for you in just the last 10 minutes it looks like you will need to have at least a 660 to get there. As for the seasoning of funds issue I like to use verifications of deposit. They typically show the balance and the 60 day average. I have found that UW do not scrutinize VOD’s nearly as much. However do not take that to mean that I encourage or practice mortgage fraud. I just tend to choose the path of least resistance.
I also agree whole heartedly with what Ben suggested in using hard money to purchase undervalued properties and then no-season refi them immediately. So using the numbers you provided you could buy for 35K (worth 60K) and then turn around and refinance it immediately using a no-seasoning refi. I have a lot of investors who are using that product now. You can even get cash-out if the loan amount allows it. The loan amount must be 50K or higher so look for properties worth at least $62,500 and you are good to go. Incidentally for this program you only need a 620 to go stated to 80% or a 660 to go to 90%.
Also you asked about using the rents and deposits. I know you can use the 75% of the rental income to help you qualify for the payment, but I don’t believe you can use the deposits as part of your down payments or reserves. The program I described above requires six months reserves to qualify.
You’ve pretty much pinpointed the issues Im having. My scores are just a little too low to actually to a 95% LTV. Also, lenders are shying away from smaller loan amounts, under 50k, therefore thats why Ive come to this site, hopeful in finding a HML willing to work with me on the smaller amounts.
Just a follow up on this topic. I was able to verify two of the three credit scores, and im better than I suspected ~ 688 transunion and 692 experian, havnt checked equifax. So given this new info, are my chances better for 90-95% LTV (purchase) conforming on 1-4 units? What about loans under 50k? I understand the buy low and immediately do cash out refi option, Im considering that as well. What other requirements are needed for that, other than 620 scores??
Just off the top of my head I can tell you that you will need to have at least 6 months reserves (can come from a 401K or retirement account) and possibly up to 12 months depending on the lender. If you are self-employed you will need at least two years verifiable history ( can come form articles of incorporation, DBA, or a CPA Letter). From your original posting it sounds as if you already own some investment properties. If so, how many do you own? How long have you had them? I am sending you a PM.