Nationwide Mortgage & Realty, LLC
Tel: 844-953-0100 Email: info@nationwidemtg.net
Friday, March 24, 2023

Nationwide Mortgage & Realty, LLC

Fast Quote
  • Home
  • About Us
    • Career Opportunities
    • Contact Us
    • Meet the Team
  • Purchase
    • Conventional Mortgage
    • Condotel & Non-Warrantable
    • FHA Loan
    • FHA 203k
    • Fix & Flip
    • Investment
    • Jumbo Loans
    • New Construction
    • Non-QM Loans
    • USDA Loans
    • VA Purchase Loan
  • Refinance
    • Cash Out & Debt Consolidation
    • Conventional Refinance
    • Condotel & Non-Warrantable
    • FHA 203k
    • FHA Streamline Refinance
    • Investment
    • Non-QM Loans
    • Reverse Mortgage
    • VA IRRRL (Streamline)
  • Loan Process
    • Application Checklist
    • Credit Repair
    • Home Buying Do’s and Don’ts
    • Interest Rates
    • Mortgage Calculator
  • Mortgage Blogs
  • Request Information
    • Apply Now
No Result
View All Result
Contact Info | Request Info
Home Purchase

Fannie Mae Investment Property Down Payment & Alternative Options

byNicholas Auriemma, NMLS# 1455001
3 years ago
inPurchase, Refinance
Fannie Mae Investment Property Down Payment & Alternative Options

Fannie Mae Investment Property Down Payment & Alternative Options

Are you looking for the minimum Fannie Mae investment property down payment or other home loan options for the down payment for a rental property? The minimum down payment for investment property depends on the agency guidelines, credit reputation, capacity, and collateral. There are plenty of investment mortgage options and choosing the right one depends on if you want to close in a Limited Liability Company (LLC), Corporation, or just simply looking for the lowest down payment option.

Minimum Down Payment for Investment Property Factors

The biggest factors that determines the down payment for rental property are determined during the pre-approval process. This depends on the Automated Underwriting System (AUS), which evaluates risk factors. For traditional loans, Loan Originator will run AUS before writing a pre-approval and the underwriter will run AUS again in underwriting.

There is not one single factor, but several that determine your ability or willingness to make a mortgage payment. An underwriter refers to the factors as credit, capacity, and collateral. Even though these play a factor, there are guidelines that state the minimum down payment for investment property.

Fannie Mae Investment Property Down Payment

Depending on the number of units, Fannie Mae’s Standard Eligibility Requirements for an investment property is:

  • 1 unit requires a minimum down payment of 15%.
  • 2 to 4 units require a minimum of 25% down.

If you are looking for conventional multi-unit financing, Freddie Mac has a minimum down payment option of 5%.

Investment Properties May Require Reserves

In some cases, you may require additional reserves if you have multiple financed properties. This is determined during the pre-approval process when the Loan Originator runs the Desktop Underwriter (DU), which provides a comprehensive credit risk assessment for eligibility requirements.

Some examples of acceptable sources of reserves are:

  • Checking and savings accounts.
  • Bonds.
  • Mutual funds.
  • Certificates of deposits. Money market.
  • Trust account.
  • Stocks.
  • Retirement account.
  • Cash value of life insurance policy.

Limits on Number of Financed Properties

Fannie Mae has limits on the number of financed properties, which is 10. There are loan programs that allow an unlimited number of properties financed, which do not take personal debt-to-income ratios as a qualifying factor.

DSR Loan for Investment Properties

The debt-service ratio loan for investment properties have a minimum down payment of 15%. They come with 30 year fixed rates or an adjustable rate mortgage. There is no limit to the number of properties financed and there are blanket loan options available. The advantages of this loan program:

  • Option to close in a Limited Liability Company (LLC) or corporation.
  • No personal income required.
  • Can finance as many properties as you want.

To get the best terms possible, the rent just has to cover the total mortgage payment (principal, interest, taxes, insurance, and home owner’s association dues). There are no ratio loan programs available too.

Freddie Mac Investment Property Down Payment

Freddie Mac also has a minimum down payment for an investment property, which is as follows:

  • 15% for 1 unit investment properties.
  • 25% for 2 to 4 unit rental properties.
  • If you occupy one unit of the units for a 2 to 4 unit property, the minimum down payment option is 5%.

The 5% down payment option on multi-units has income restrictions.

Avoid Mortgage Lender Overlays

Lenders often have internal guidelines on top of Fannie Mae and Freddie Mac guidelines, which can make it harder to qualify for an investment property. This internal guideline is often known as a lender overlay. Some examples of lender overlays include:

  • Requiring a larger down payment.
  • Requiring a higher credit score.
  • Debt-to-income ratio caps.
  • Number of properties financed.
  • Increased amount of reserve requirements.
  • And many more.

Coming Up with the Down Payment for Rental Property

There are creative ways to come up with an investment property down payment that you may not be aware of. A big hurdle in the mortgage industry is sourcing money recently deposited in a bank account. There are documentation requirements for large deposits recently deposited in a bank account in the past two months. Some acceptable sources for a down payment, but not limited to may include:

  • Gift funds or gift of equity, but must meet gift guidelines.
  • Recent sale of a business.
  • Recent sale of a property.
  • Borrowed funds secured by an asset – cashing out on a home, automobile, stocks, bonds, 401k accounts, or other assets.

If large deposits are not within the past two months, the money does not need to be sourced. It is important for you to go over recent transactions with your Loan Originator for adequate documentation for sourcing funds.

Share3TweetShare
Previous Post

Cash Out Refinance Rates, Consolidation Loans, and Closing Costs

Next Post

Conventional Loan Requirements, Loan Limits & Down Payment Options

Nicholas Auriemma, NMLS# 1455001

Nicholas Auriemma, NMLS# 1455001

Nicholas Auriemma is a Loan Originator at Nationwide Mortgage & Realty, LLC, providing information on mortgages that can often be confusing even to real estate and mortgage professionals. Borrowers can be discouraged because mortgage professionals can be mistaken due to guidelines always changing, the extent of guidelines, their company having an overlay (stricter guideline), or other lenders not offering a loan program. Call or text Nick anytime at 630-779-8430 or email at nick@nationwidemtg.net.

Related Posts

No Income Investment DSCR Cash Out Refinance

No Income Investment DSCR Cash Out Refinance

May 26, 2022
15 to 30 Year VA Cash Out Loan Up To 100% LTV

15 to 30 Year VA Cash Out Loan Up To 100% LTV

May 24, 2022

Categories

Get Pre-Approved

Start by applying to get pre-approved today.

Recent Posts

No Income Investment DSCR Cash Out Refinance

15 to 30 Year VA Cash Out Loan Up To 100% LTV

Cash Out Condotel Refinance Loan, Rate & Term, & Purchase

3 Month Bank Statement Mortgage for Self-Employed Borrowers

Is there Still a No Doc Mortgage in 2022?

Low Down Payment Jumbo Loans with No Mortgage Insurance

Request Information | Apply Now

Corporate Address:
1 TransAm Plaza Drive Suite 300
Oakbrook Terrace, IL 60181
Phone: (844) 953-0100
Fax: (630) 953-0101
Email: Info@nationwidemtg.net

Copyright 2021 © Nationwide Mortgage & Realty, LLC
Company NMLS Unique Identifier #276777.
For licensing information, go to:
www.nmlsconsumeraccess.org.
Privacy Policy | Terms of Use

Equal Housing Lender

Restrictions may apply. All loans are subject to credit, underwriting and property approval guidelines. Nationwide Mortgage & Realty, LLC is not acting on behalf of or at the direction of HUD/FHA or any government agency. CO: Check license status of your mortgage loan originator at www.dora.state.co.us/real-estate/index.htm. Also licensed in: CA, FL, IN, TN, VA, WI and TX: NMLS ID 276777. Illinois Residential Mortgage License | MB. 6760210. WA: Consumer Loan License MB-276777. GA: Georgia Residential Mortgage Licensee 60857

  • Home
  • Request Information
    • Apply Now
  • About Us
    • Career Opportunities
    • Contact Us
    • Meet the Team
  • Purchase
    • Conventional Loan
    • Condotel & Non-Warrantable
    • FHA Loan
    • FHA 203k
    • Fix & Flip
    • Investment
    • Jumbo & High Balance
    • New Construction
    • Non-QM Loans
    • USDA Loan
    • VA Purchase Loan
  • Refinance
    • Cash Out & Debt Consolidation
    • Conventional Refinance
    • Condotel & Non-Warrantable
    • FHA 203k
    • FHA Streamline Refinance
    • Investment
    • Non-QM Loans
    • Reverse Mortgage
    • VA IRRRL
  • Loan Process
    • Application Checklist
    • Credit Report
    • Home Buying Do’s and Don’ts
    • Interest Rates
    • Mortgage Calculator
  • Mortgage Blogs
No Result
View All Result

Request Information | Apply Now
Phone
: (844) 953-0100
Email:
info@nationwidemtg.net
Nationwide Mortgage & Realty, LLC
​1 TransAm Plaza Drive Suite 300
​Oakbrook Terrace, IL 60181
NMLS # 276777
Privacy Policy

Call Now Button