Real Estate Investor Financing Options

Good Morning – We assume that the real estate investors are going to start coming out of the woodwork fairly soon.  Here is an update on financing options for your buyers.

• Minimum down payment 20%
  • With this down payment Fannie Mae/Freddie Mac charge 3% points, based on the loan amount.  Buyers can pay these 3% points up front, or can absorb these points by raising the interest rate approximately ½ point
• Better down payment of 25%
  • Fannie/Freddie charges 1.75% fee for this down payment.  Again, this 1.75% fee can be absorbed by taking approximately ¼ point higher rate.To use RENTAL income from subject property:
  • Buyer must have 2 year history of managing rental properties.  Documented with 2 year tax returns.
  • Without 2 year history, buyer must qualify for purchase without any rental income to offset mortgage payment
  • Some investors may waive this two year rental history guideline with larger down payments.
• Typical Fannie/Freddie rule only allows for a total of 4 financed properties.  Some portfolio lenders still will go up 10 properties (rates will be higher.)
• Find a Fannie Mae owned property and utilize the HomePath loan.  Minimum down 20%. No appraisal required so it’s a GREAT program for Fixers!
• If your client is planning on flipping a property, be aware of additional underwriting requirements that the new purchaser will have to go through.
  • If flip is within 90 days of title transfer, additional appraisals and inspections may be required