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Fannie Mae Does Investor Loans

by admin on November 25, 2009

Ever since the bank/mortgage implosion last year, it has become very difficult for investors to get financing. At first, Fannie Mae set a limit of four mortgages, which meant that investors who had a mortgage on their personal residence plus three more mortgages on investment properties could not get any more loans because Fannie Mae would not buy them from the originating lender. And 99% of lenders would not even think about underwriting new loans if they couldn’t sell them.

Congress eventually figured out that this policy was making the real estate market worse by eliminating investors who represented 20% to 25% of the home buyers. So now the Fannie Mae limit is ten mortgages total, including your personal residence. If you have four mortgages or less, they will allow cash-out refinances on investment properties. More than four and all you can do is a new (purchase money) loan or a refinance with limited cash-out, where you are only permitted to add the loan fees/closing costs to the loan balance. On your personal residence, Fannie will allow refinances (including cash-out) even if you have ten or more mortgaged properties.

The new rules also require full documentation (tax returns, proof of income, W-2s, pay stubs) and good credit. No more stated income loans! If you think you qualify, start calling all of the mortgage lenders in your area. Why? Because most are probably going to say that the limit is four mortgages, even though it is really ten at Fannie Mae. When this happens, ask if they realize that Fannie increased the limit from four to ten and see what they say. (Suggest that they email their underwriter to verify the higher limit.) In most cases when they say the limit is four, it’s really because the bank is too lazy to do loans for clients with ten mortgages because the underwriting process involves a little more work for them. So just keep calling lenders and you will eventually find one who isn’t afraid of a little work. Then you can buy more Sacramento investment property!

{ 1 comment… read it below or add one }

1 noosa accommodation June 9, 2010 at 11:51 AM

However, most investors have discovered that even well-qualified borrowers (great credit, cash reserves, proof of income, etc.) are unable to get mortgages to buy or refinance investment properties.

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