Investor loans sold to Fannie Mae or Freddie Mac require a down payment ranging from 10% to 25% with a delivery fee ranging from 1.5 to 3 points. Please understand that these fees are imposed by Fannie and Freddie and are not charges from either your lender or your broker. However, the fee allows using conventional rates and loan limits. These conforming loans are available as either fixed rate or an ARM. Even with the delivery fees, these loans can be a good choice if your goals are to maximize cash flow and you plan to hold the property for a 3 to 5 year period. Ratios are normally 28/36, but with automated underwriting, Excellent credit and some liquid reserves, it is not uncommon to see back ratios in the middle 40s. Rental income is decreased by a 25% vacancy factor but there are underwriting methods which eliminates this issue for experienced investors.
The Investor Loan Specialty program (actually a growing group of investor loan programs) allows purchase or refinances with only 5% equity. The program allows up to 20 properties plus your home. Available up to $1,000,000 and 2-4 unit properties are acceptable. Ratios are generally 34/40 and a No Documentation program is available. Available as a fixed or adjustable rate in many reduced downpayment scenarios..
NEW! 100% loans for real estate investors are now available with fairly reasonable rates. These programs have been available for a while, but at extremely high rates compared to market rates. We finally have a source of financing that will allow you to acquire property with limited out of pocket costs.
I have an investor loan based on the LIBOR Index. The LIBOR (London Interbank Offered Rate) Index is more stable than the COFI index (Cost of Funds Index). Comparison charts between the COFI, LIBOR and MTA indexes are available. One feature of the program is four repayment options. You can decide to amortize the loan for 30 or 15 years, a minimum amount, or interest only. You can choose every month and have the flexibility to manage cash flow as never before!
I have a page on how to calculate your qualification ratios.
I have a page on documentation requirements.
If the building you are looking at contains 5 or more units, it will be considered a commercial property. We can still help you with your financing needs.
If your interest is in foreclosure property as a real estate investment, visit my foreclosure page for information and links to property resources.
Here are my thoughts on the difficulty of "flipping" investor properties.
For the the greatest flexibility and maximum loan qualifying ratios, you may be interested in the Cash Flow ARM. This may be the very best option for an investor.
New! I have added a page on how to properly compare different investment property that may be helpful to you