As of February 6, 2009 Fannie Mae expanded the financing options for borrowers of investment in rental property and second home borrowers to finance up to ten properties if specific eligibility requirements and financial prerequisites are met. Thus, Fannie Mae has realized the importance that investment in rental property has on our economy. Previous investment property laws stated a borrower may only finance up to four one-to-four family unit properties and only if the mortgage of the said properties is secured by a second home or other investment property.
- On one-family unit investment rental properties, the property may only be financed up to 75% of the loan-to-value with a minimum credit score of 720.
- On two-four-family unit investment rental properties, the property is limited to 70% of the loan-to-value with a minimum credit score of 720.
- On one-four family unit investment rental property cash-out-refinances, the property will only be qualified for a cash-out refinance if the loan-to-value is 70% or less and the borrower’s credit score is 720 or higher.
- The said borrower may not have a history of bankruptcy or foreclosure within the last seven years.
- The said borrower may not have any late payments on any existing properties within the last year.
- Rental income of any existing investment properties must be fully documented.
- The said borrower must complete the 4506 form to request income taxes directly from the IRS.
- The said borrower must retain adequate reserves for all investment rental properties. Reserves are typically going to be two-six months of monthly property income depending on property type and the number of financed properties.
This new guideline will increase the number of investor loans in the marketplace and will hopefully be a key role in the economic upturn. If you are looking to purchase a second home or an investment in rental property in Texas, you can now finance up to ten investment properties.
Please call me at 1-512-750-9197 or email me at rachel (@) lonestarfinancing.com to discuss your financing alternatives. I will be happy to present you with the various options you have regarding second home or investment in rental property financing.