Investment Property Loans and Rental Property Financing
In this article, we will cover and discuss investment property loans and rental property financing. What Are The Eligibility Mortgage Guidelines On Investment Property Loans? Gustan Cho Associates has launched dozens of non-QM loan programs for investment properties.
Non-QM Loans For Investment Properties
Non-QM mortgages benefit real estate investors during this booming housing market. Gustan Cho Associates has dozens of non-QM wholesale lending partners that offer owner-occupant, second homes, and investment home financing. We even have asset depletion, bank statement mortgages, and investor cash-flow loan programs on investment properties. Investment properties can close under a Limited Liability Corporation (LLC). In this article, we will discuss and cover financing investment property loans.
Updated Non-QM Investment Property Loans
Gustan Cho Associates has new Rental Property Financing and Investment Property Loans that have not been in the marketplace since the Real Estate and Market Collapse of 2008. Rental property investors can now qualify for rental property financing and no doc investment property loans. Borrower’s debt to income ratios does not matter. There is no limit on the number of rental properties the investor has on their portfolio. Down payment requirements are 20% to 30% depending on the borrower’s credit scores. The only thing that we go by is the property itself. Property needs to cash flow. Investment Property Loans is available in all 50 states. It is really popular in Chicago, Illinois as well as larger cities in New Jersey, Pennsylvania, Kentucky, Mississippi, Florida, Washington, Virginia, Indiana, Wisconsin, California, Georgia, Alabama, Colorado, Michigan, Kansas, Ohio, Arizona, and the rest of the nation.
Rental Properties Mortgage Loan Program
There are two types of Loan Programs:
Individual or Single Property Loans:
- This loan program is based on 30 year fixed rate fully amortized mortgages
Portfolio Investment Loans:
- This program is a portfolio property loan program for investors who have at least 7 plus income-producing rental units
- Able to purchase multiple properties and/or refinance and/or get a line of credit or the combination of purchase/refinance/line of credit based on the equity of their investment property portfolio
Benefits of Non-QM Investment Property Loans
Here is the reason why the Investment Property Loan Program is different than any other commercial/investor mortgage program:
- This is a no doc program where income verification is not required
- It is solely underwritten based on the cash flow of the subject property
- This unique program is underwritten based on the debt coverage ratio
- It is not based on the individual debt to income ratio
- Unlike Fannie Mae’s 5 to 10 Financed Properties Guidelines, there is no limit on the number of properties financed with Investment Property Loans
- Again, unlike traditional Investment Conventional Loans, Rental Property Financing and Investment Property Loans can be financed directly to an LLC
It is not only restricted to an individual borrower and co-borrowers.
Single Investment Property Loans
The single investment property loan program is for both purchases and refinances.
Here are the types of properties that can be financed:
- Single Family Homes
- Condominiums: Non-Warrantable Condominiums are allowed
- Two to Four unit apartment buildings
The minimum property value needs to be $100,000 and the minimum loan amount is $75,000.
Down Payment And Loan To Value Requirements
There are down payment and loan to value requirements on investment property loans. The down payment and LTV requirements are based on the borrower’s credit scores. Here are the down payment requirements for Purchases and Refinances:
- For borrowers with 700 credit scores and higher, 20% down payment are required on purchases and 80% LTV on refinances
- For borrowers with credit scores between 680 and 699, the down payment required are 25% on purchases and 75% LTV on refinances
- For borrowers with credit scores between 660 and 679, the down payment requirement are 30% and 70% LTV on refinances
The minimum credit score to qualify for Investment Property Loans is 660 credit scores. Borrowers with under 660 can contact us and Gustan Cho Associates will help them improve and boost their credit scores to a qualifying score so they can qualify for the program.
Property Debt To Income Ratio Requirements
This program is underwritten by the cash flow of the property and not the borrower and/or co-borrowers. Here is the formula of the property debt to income ratio requirements:
- For properties where their value is $150,000 or greater, the maximum cash flow coverage requirement is 85%
- For properties where their value is less than $150,000, the maximum cash flow coverage requirement is 70%.
The cash Flow Coverage is calculated by taking the PITIA and dividing it by the Gross Rents.
Portfolio Lines Of Credit
The portfolio lines of the credit program are for investors who have at least 7 rent-producing investment units. It does not need to be 7 separate properties but rather 7 individual rent-producing units. The minimum loan amount is $700,000 and investors can purchase a combination of properties with this program. If investors cannot meet the minimum loan requirement of $700,000, they can either purchase two or more investment properties or do a purchase and/or refinance or combination of the two to meet the minimum loan requirement.
7 Unit Guidelines To Qualify On Blanket Line Of Credit
Here is an example of the 7 units:
- 7 single-family homes
- 4 duplexes
- 2 four-unit buildings
The above examples show at least 7 or more rent-producing units. This program allows investors a blanket line of credit where they can use it anytime for any purposes they need. It can be used to purchase an investment property or to do rehab on their rental properties or any personal reasons. There is no other investment loan program like this today. Investors do need at least 7 rental-producing properties with equity in order to qualify. Portfolio loans and lines of credit are for purchase and refinances or the combination of both. Investment homes do not have to be in the same state and can be located in multiple states.
Types Of Properties Eligible
The following are the types of investment properties that are eligible for the portfolio loan and blanket line of credit program:
- Single-family homes
- Non-Warrantable Condominiums are allowed
- Two to four-unit buildings
- 5 to 20 unit apartment buildings
- The minimum per unit property value is $50,000 and the minimum portfolio loan and/or line of credit amount is $700,000
- Maximum Loan To Value is 75% LTV
- The minimum DSCR is 1.15x which is calculated by taking the NOI divided by the PI
- At least 90% of the units need to be occupied and rented
- The borrower needs to be under the name of an LLC of the borrower
- Although the borrower’s personal debt to income ratio is not required, the minimum credit score of the borrower needs to be at least 660 FICO.
- Down Payment Requirements for purchase or loan to value for refinances depends on the borrower’s credit scores
Borrowers need at least a 660 for 70% LTV, 680 for 75% LTV, and at least 700 for 80% LTV.
Qualifying For Investment Home Loans
Investors who are ready to get into the real estate market, whether new or seasoned, can now qualify for this special investment property mortgage program. To learn more about it, contact Gustan Cho Associates at 262-716-8151 or text for a faster response. Or email us at [email protected] The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays to take your mortgage inquiry. Gustan Cho Associates is a mortgage company licensed in multiple states with no lender overlays on government and conventional loans. We also are experts in non-QM and alternative financing loan programs.