I have a fourplex lined up with a seller willing to carry 10%. I have 20% down, looking to get financed on the remaining 70%.
My lender, who I used to purchase my home, is telling me the minimum down payment for any non owner occupied property is 25%, without exception.
Is that accurate, or is my lender only telling me what HE has available?
NOO loans
I am a retired RE investor and gotten a number of NOO loans.
The long and short of it is that’s all they got to offer, or available. Usually banks that originate NOO loans sell it right away or soon after to others, FMNA Mae, private investors, or other banks. They don’t want to hold it for various reasons, one being it ties up too much capital.
So they must follow strict underwriting guidelines or risk the buyer of these investments suing them for fraud. We just went thru a banking crisis where billions or dollars of mortgages sold simply didn’t meet guidelines.
I invest in the city, and from what I’m told, small country banks holds mortgages, but unfortunately don’t provide mortgages in the city.
One way to do it is start off with an OO loan, either you or a partner living there, and then later refi it as an NOO loan, when hopefully the property appreciated.
In fact, I bought a foreclosure from a bank, and deal was they provide the mortgage with 10% down. Out of curiosity, I asked if it’s an NOO loan since I planned to hold it and rent it out. The answer I got was it’s neither since they plan to hold the mortgage in their portfolio. They further explained that the mortgage would not meet investment guidelines to begin with. So I could rent it, flip it, or live in the place myself for all they care.
And to complete the story, the 3 family I lived it, I just got an OO loan the year before, so I check thru the loan documents to see if I would violate the loan covenants if I moved to the foreclosure house. Turns out the loan only requires me to live in it for at least 24 months. I wound up moving to the foreclosure house, and waited several months to notify the mortgagor of the OO loan for my 3 family home that I moved, and note the change of address.