Columbus Loans & Home Mortgages

Just got this in from one of our loan officers. It’s not impossible to get financing for investment properties these days. It’s just much harder than it used to be.

Fannie Mae will now finance the purchases of one-unit homes for investors with an interest in between 5-10 properties, provided that all of the following guidelines are met:

• 25 percent down payment on the investment property;
• Minimum credit score of 720;
• No mortgage payments late within the last 12 months;
• No bankruptcies or foreclosures in the last seven years;
• Two years of tax returns showing rental income from all rental properties;
• Six months of principal, interest, taxes and insurance reserves on each of the financed properties.

And lastly, to reduce fraud, Fannie Mae will now require all real estate investors to sign a form granting lenders permission to verify supplied tax returns against the official, IRS-filed version. This document is less commonly known as a 4506-T.

What does this mean?

Compared to loans available to owner occupant buyers, these requirement are very, very tough. The credit score and the 12 months no late payment requirement make a lot of sense. Seven years without a bankruptcy may be difficult for some guys. But everybody should be able to produce 2 years of tax returns.

However, having reserves for all your rental properties for six months is definitely a deal killer. You are talking tens, if not hundreds of thousands of dollars. I don’t know any small investor who would have that much money sitting around. You’d certainly rather use it to rehab a house or invest in your business.

Bottom Line

These Fannie Mae loans do not make sense for small investors. I recommend you go to a local bank where you will get more reasonable terms.

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