Rental Property Financing And No Doc Investment Property Loans
This ARTICLE On Rental Property Financing And No Doc Investment Property Loans Was Written By Gustan Cho NMLS 873293
Gustan Cho Associates has new Rental Property Financing And No Doc Investment Property Loans that has 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 where the borrower’s debt to income ratios does not matter and there are no limit on the number of rental properties the investor has on their portfolio
- Down payment requirements is 20% to 30% depending on the borrower’s credit scores
- The only thing that we go by is the property itself and make sure that the property cash flows
- Investment Property Loans is available in all 50 states and is really popular in Chicago, Illinois as well as larger cities in Florida, Washington, Virginia, Indiana, Wisconsin, California, Georgia, Alabama, New Jersey, 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 where they are 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 No Doc Investment Property Loans
Here is the reason why the No Doc 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 and it is solely underwritten based on the cash flow of the subject property
- This unique program is underwritten based on debt coverage ratio and 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 amount of properties financed with the No Doc Investment Property Loans
- Again, unlike traditional Investment Conventional Loans, Rental Property Financing and No Doc Investment Property Loans can be financed directly to an LLC and 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
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 is based on the borrower’s credit scores.
Here is the down payment requirements on Purchases and Refinances:
- Borrowers with 700 credit scores and higher, 20% down payment is required on purchases and 80% LTV on refinances
- Borrowers with credit scores between 680 and 699, the down payment required is 25% on purchases and 75% LTV on refinances
- Borrowers with credit scores between 660 and 679, the down payment requirement is 30% and 70% LTV on refinances
Minimum credit scores to qualify for Investment Property Loans is 660 credit scores.
- Borrowers with under 660 can contact us and The Gustan Cho Team at 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%.
- Cash Flow Coverage is calculated by taking the PITIA and dividing it by the Gross Rents
Portfolio Lines Of Credit
The portfolio lines of credit program is 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
- 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
Here is an example on the 7 units:
- 7 single family homes
- 4 duplexes
- 2 four unit buildings
The above examples shows 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 does 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 is 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
- 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
- Minimum DSCR is 1.15x which is calculated by taking the NOI divided by the PI
- At least 90% of the units needs to be occupied and rented
- The borrower needs to be under the name of a 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 800-900-8569 or 262-878-1965. Investors can also text Gustan Cho for faster response on his cell at 262-716-8151. We are available 7 days a week, evenings, weekends, and holidays to take your mortgage inquiry.
The Gustan Cho Team at USA Mortgage is a national direct lender with no lender overlays on government and conventional loans.