What Is Fannie Mae 5-10 Financed Properties?
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 home mortgage lending guidelines apply. However, homeowners with more than 4 financed properties need to abide by Fannie Mae 5-10 financed properties mortgage lending guidelines. Right after the real estate and credit collapsed, Fannie Mae limited the amount of financed properties to 4 financed properties which included the homeowners principal residence. Fannie Mae now changed the maximum of 4 financed properties and allows homeowners to have up to 10 financed properties. Not all mortgage lenders participate on Fannie Mae 5-10 Financed Properties mortgage loans. Fannie Mae 5-10 Financed Properties is a niche market and only a few participating mortgage 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 where 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, but with the implementation of Fannie Mae 5-10 Financed Properties, they can now expand their real estate investments and qualify for investment home loans.
Processing and underwriting Fannie Mae 5-10 financed properties mortgage loans
Many banks and credit union steer away from Fannie Mae 5-10 financed properties mortgage loan applications 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 underwriter. Two years W-2s, two years tax returns, and recent pay check stubs is just required for traditional mortgage loans. However, for real estate investors with 4 or more financed properties, the mortgage lender will require and underwrite every property schedules on the 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, and 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 mortgage lenders view investment property financing as high risk so they need to make sure that no mistakes are made and 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. You have Fannie Mae’s minimum lending guidelines and you have the individual mortgage lenders’ overlays. We will just discuss Fannie Mae’s minimum lending gudelines on 5-10 Financed Properties.
Minimum down payment is 25% on any properties between 5 to 10 financed properties that is 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 FICO. The mortgage loan applicant cannot have any mortgage late payment history in the past 12 months. Many mortgage lenders may extend this requirement as part of their mortgage lender overlays. Some mortgage lenders do not want to see any mortgage late payments period. 5-10 properties mortgage loan applicants 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.