Buying Non Owner Occupied Property – Investment Mortgage Demands by Lenders
One of my favorite mortgage lenders, George Soutu, is sharing requirements home investment buyers must know. This time it is on purchasing non owner occupied investment property (more than one family unit).
There are issues with buyers lack of understanding of mortgage financing requirements for different type properties. Recently Ginny Gorman asked me to write a blog on mortgage financing requirements for investment properties. My first blog “Mortgage Financing Requirements For Owner Occupied Investment Properties” covered mortgage financing requirements for multi unit properties where the Borrower will be occupying at least one of the units. This second blog will cover additional mortgage financing requirements for properties the Borrower will NOT occupy any of the units. The property is strictly for investment purposes.
As I also stated yesterday mortgage financing requirements for owner occupied investment properties are stricter. Also, realize that residential mortgage financing is only available for properties with 1-4 units. Properties with 5 plus units are classified as commercial properties and require commercial financing.
With Mortgage Financing for Non-Owner Occupied Investment Properties ONLY Conventional Loan Programs are available for financing on these properties. VA, and FHA will only provide financing for properties where the Borrower will occupy one of the units.
Non-Owner Occupied Investment Properties will also have additional investors (lenders that sell loans to after they are closed) requirements imposed. Some of the Mortgage Financing imposed For Non-Owner Occupied Investment Properties are:
- 1 unit property maximum financing is 80% of selling price or appraised value, which ever is the lowest.
- 2-4 unit properties maximum financing is 75% of selling price or appraised value, which ever is the lowest.
- NO GIFT funds are allowed, all funds HAVE to be the borrower’s own funds.
- Arms Length Transactions are a must.
- Rent Loss Insurance is required.
- Residual Income maybe required (for emergency costs for the units that may come at you).
- Seller contributions towards Closing Costs is limited to 2% of the selling price or appraised value, which ever is the lowest.
- As much as 6 Months Reserves may be needed.
- Reserves cannot be gifted.
- On Fannie Mae backed loans, additional Loan Level Price Adjustment will be applied depending on the Loan-To-Value (LTV). Could be as much as 4.125 points regardless of FICO Score.
These are not all the additional Mortgage Financing Requirements For Non-Owner Occupied Investment Properties but they are what I consider the major ones.
As you can see Borrowers requiring Non-Owner Occupied Investment Property purchases will have to have more of their own funds than on an owner occupied investment property. Now you see why you talk to a mortgage lender who knows their information before you look at investment property! Talk with someone like George Soutu and then talk to your RI real estate agent to guide you well.
Buying multi unit non owner occupied investment property as an investment takes funds.
Info about this blogs mortgage author and guest blogger, George Soutu:
Is a mortgage Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County. George Soutu can be contacted at (860) 573-1308 or firstname.lastname@example.org.
I appreciate George’s shares on mortgage information in the current real estate times with my web site readers at www.RIHouseHunt.com. It is so important that buyers of multi family units understand the commitment and monies needed to go forward with a purchase.
Non-owner occupied multi unit home purchases for less that 5 units and their mortgage requirements.
Rhode Island real estate agent, Ginny Lacey Gorman, lists, markets and successfully sells homes and waterfront property at top prices in Rhode Island at 401-529-7849 or email at Ginny@RiHouseHunt.com today. Real estate expertise that works for you the seller.