If the property appraises for $210,000 and your purchase price is $185,000 or $180,000, lender will not have problem with value.
If your credit is good and you can do a FULL DOC loan (that is document all income) , debt ratio is within the limit, you may be able to qualify up to 100% LTV even if its an investment property.
There are also STATED income loans for rental properties, but you must have very high credit scores to meet the qualification guidelines.
Posted by Justin on September 08, 2003 at 22:00:21:
Hello. I’m 23 and currently own and live in a town house. Through some nosing around I learned that the property next door to me is owned by an individual out of state. The property is becoming a little run down. I contacted the owner to see if she was interested in selling. She seems to be a pretty motivated seller. The townhouse will appraise to about $210,000. She doesn’t really know what the property is worth. She’s owned if for 10 years and has never raised the rent! She is collecting $735 per side. Average rates in the area are about $850. Tennants have been there for 7 and 10 years.
Anyhow, I told her I am interested in purchasing and she immediately shot me a price of $185,000. I hope to settle on about $180,000. My question is about the financing. The current owner is not interested in offering financing. I’m looking at getting conventional financing. Will I need to come up with 20 % of the purchase price? or just get the loan amount down to 80% of the appraised value? Its a difference of $36,000 down vs. $12,000 down.
Will the bank be interested in lending on this property? I have good credit but currently owe $199,000 on a $220,000 property. I’m basically just trying to explore my financing options of how I can make this happen.