New Investor Guidelines for Multiple Properties

Investors have been shut out of the huge opportunites that are available today due to the 4 property rule.  Recently Fannie Mae has reverted back to a maximum of 10 properties financed.  There are some very stringent requirements, but for the right borrower, this is a fantastic opportunity.  Here are the highlights:

Restrictions for borrowers with 5 to 10 properties:

• The borrower cannot have any history of bankruptcy or foreclosure within the past 7 years.
• The borrower cannot have any delinquencies (30-day or greater) within the past 12 months on any mortgage loans.
• Rental income on the subject investment property must be fully documented.  Rental income from other properties owned by the borrower must be supported by 2 years’ federal income tax returns.
• Federal Income Tax Returns must be verified by transcripts obtained from the IRS
• The borrower must have reserves for the subject property and for other properties currently owned by the borrower (no other financed second home and investment properties).

Reserve Requirements

When the borrower will own 1-4 financed properties (including the subject property) the minimum reserve requirements are:

• 2 months of reserves on the subject property if it is a second home,
• 6 months of reserves on the subject property if it is an investment property, and 2 months of reserves on each other financed second home or investment property.

When the borrower will own 5 - 10 financed properties (including the subject property) the minimum reserve requirements are:

• 2 months of reserves on the subject property if it is a second home,
• 6 months of reserves on the subject property if it is an investment property, and
• 6 months of reserves on each other financed second home or investment property.

Multiple Properties and the Fannie Mae Homepath Mortgage

Homepath financing is available for borrowers with 5 to 10 properties, however, the 90% financing option is not available.  Even on Homepath the limit will be 75%.  Given the additional cost of the Homepath option, in this case, the borrower would be better served with the standard conventional option.

See our previous post regarding the Homepath Mortgage.