Fannie Mae 5-10 Financed Properties Mortgage Guidelines

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Fannie Mae 5-10 Financed Properties Mortgage Guidelines

This BLOG On Fannie Mae 5-10 Financed Properties Mortgage Guidelines Was UPDATED On May 6th, 2019

Fannie Mae 5-10 Financed Properties Mortgage Guidelines

The Real Estate and Mortgage meltdown of 2008 has brought on many changes in the mortgage industry.

  • Days of stated income or no doc mortgage loans have long been gone
  • Fannie Mae also came up with new more lending guidelines on Fannie Mae 5-10 Financed Properties
  • Up to 4 financed properties, regular investment conforming lending guidelines apply
  • However, homeowners with more than 4 financed properties need to abide by Fannie Mae 5-10 financed properties mortgage guidelines
  • Right after the real estate and credit collapsed, Fannie Mae limited the number of financed properties to 4 financed properties
  • This included the homeowners’ principal residence
  • Fannie Mae now changed the maximum of 4 financed properties
  • Fannie Mae allows homeowners to have up to 10 financed properties
  • Not all lenders participate on Fannie Mae 5-10 Financed Properties loans
  • Fannie Mae 5-10 Financed Properties is a niche market
  • Only a few participating lenders actively promote this niche mortgage loan program

Financing 4 Or More Properties At The Same Time

Financing 4 Or More Properties At The Same Time

Fannie Mae has increased the maximum a homeowner and/or real estate investor can have financed property from 4 units to up to 10 units in 2009 to promote the housing market in the United States.

  • This allowed investors to invest in the housing market
  • They can go out and purchase foreclosures, REOs, short sales, vacant properties, land, and stimulate the housing market
  • Qualified real estate investors were limited in having a maximum of 4 financed properties after the real estate market crash
  • With the implementation of Fannie Mae 5-10 Financed Properties, they can now expand their real estate investments and qualify for investment home loans

Underwriting Fannie Mae 5-10 Financed Properties Mortgages

Underwriting Fannie Mae 5-10 Financed Properties Mortgages

Many banks and credit union steer away from Fannie Mae 5-10 financed properties due to the time-consuming complexity in processing and underwriting these mortgage loans.

  • Standard owner occupant, second home, and investment home loans are normally easy and not time-consuming to process and underwrite
  • Two years W-2s, two years tax returns, and recent pay check stubs are just required for traditional mortgage loans
  • However, for real estate investors with 4 or more financed properties, lenders require and underwrite every property schedules on the following:
    • Real Estate Owned Schedules
    • complete personal and business tax returns
    • mortgage verification for all properties the real estate investor owns
    • verify all property tax information and payment verification on all individual properties the real estate investor owns
    • verify all leases for all properties the mortgage loan applicant has
    • other credit and financial profile of the owner, partners, and properties
  • It can be a very time consuming and expensive mortgage approval process
  • Also, banks and credit unions, and most lenders view investment property financing as high risk
  • They need to make sure that no mistakes are made
  • Every part of the mortgage application will be strictly and carefully scrutinized

Fannie Mae 5-10 Financed Properties Lending Guidelines

What is the Fannie Mae 5-10 Financed Properties Lending Guidelines

There are two sets of mortgage lending guidelines on 5-10 Financed Properties.  Have Fannie Mae’s minimum guidelines and you have the individual mortgage lenders’ overlays.  We will just discuss Fannie Mae’s minimum lending guidelines on 5-10 Financed Properties.

The minimum down payment is 25% on any properties between 5 to 10 financed properties that are a one unit property.

  • For 2 to 4 unit properties, the minimum down payment required is 30% down payment
  • The borrower applying for Fannie Mae 5-10 Financed Properties must have a minimum credit score of 720
  • Borrowers cannot have any mortgage late payment history in the past 12 months
  • Many lenders may extend this requirement as part of their overlays
  • Some lenders do not want to see any mortgage late payments period
  • 5-10 properties borrowers cannot have had any foreclosures, deed in lieu of foreclosures, short sales, or bankruptcies in the past 7 years
  • Two years of tax returns and rental income listed on all schedules for the past two years
  • Six months of reserves which consist of principal, interest, taxes, and insurance for every property, including the primary home, is required for all financed properties

Related> Delayed Financing

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