This blog will cover Fannie Mae 5-10 financed properties for real estate investors. The Real Estate and Mortgage meltdown of 2008 has brought about many changes in the mortgage industry. Fortunately, non-QM loans are back. Homebuyers can now qualify for non-QM stated income and no doc mortgage loans.
Fannie Mae also developed new lending guidelines on Fannie Mae 5-10 Financed Properties. For up to 4 financed properties, regular investment conforming to lending guidelines apply. However, homeowners with more than four financed properties must abide by Fannie Mae 5-10 financed mortgage guidelines.
Updated Fannie Mae 5-10 Financed Properties
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 in Fannie Mae’s 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 5 or More Properties at The Same Time
Fannie Mae increased the maximum a homeowner, and 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, and land and stimulate the housing market.
Qualified real estate investors were limited to 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 unions steer away from Fannie Mae 5-10 financed properties due to the time-consuming complexity of 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 complete personal and business tax returns.
Verification of Mortgage During Mortgage Process
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 profiles of the owner, partners, and properties.
Financing an Investment Home Versus an Owner-Occupant House
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. Underwrite.
Income Docs Required To Start Mortgage Process
Traditional mortgage loans require two years of W-2s, two years of tax returns, and recent paycheck stubs.
Real estate investors with four or more financed properties, lenders require and underwrite every property schedule on the following: Real Estate Owned Schedules.
Fannie Mae 5-10 Financed Properties Lending Guidelines
There are two mortgage lending guidelines for 5-10 Financed Properties. Have Fannie Mae’s minimum guidelines, and you have the individual mortgage lenders’ overlays. We will discuss Fannie Mae’s minimum lending guidelines on 5-10 Financed Properties.
Fannie Mae 5-10 Financed Properties Down Payment Requirements
The minimum down payment is 25% on any properties between 5 to 10 financed properties that are one unit. The minimum down payment required for 2 to 4-unit properties is a 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 late mortgage payments, period.
Fannie Mae 5-10 Financed Properties Credit Guidelines of Borrowers
5-10 properties borrowers cannot have had any foreclosures, deeds in lieu of foreclosures, short sales, or bankruptcies in the past seven years. Two years of tax returns and rental income are 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.
December 3, 2022 - 4 min read