This BLOG On Fannie Mae 5-10 Financed Properties Mortgage Guidelines Was UPDATED On May 6th, 2019
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 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 loans
- 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
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 investment properties, they can now expand their real estate investments and qualify for investment home loans.
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
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
