financing two or more properties
We understand that buying multiple properties at once is a complex venture. If you play your cards right, you’ll grow your real estate portfolio quickly and have multiple monthly income streams. That is money you can use to reinvest, pay for ongoing expenses or put towards other goals such as starting a college fund, launching a business, or remodeling your primary residence.
So whether you’re looking to purchase or refinance multiple properties, we’ve got you covered. With our Multiple-Property Discount program, you’ll pay the application and commitment fees of a single property when you submit all applications within 30 days. We’ll waive those costs for the remaining properties, up to $2,500 a loan.
All types of residential homes are eligible. Examples include single-family homes, multi-family homes, townhouses or condos, cooperatives, and duplexes.
• Credit reports (pulled from the three bureaus Equifax, Experian, and TransUnion)
• Tax returns from the last two years
• W-2s of 1099s for proof of streams of income • Bank statements (e.g., brokerage accounts and IRAs, etc.)
• Financial statements (e.g., balance sheet, tenant rent history, and appraisal, etc.)
What to Consider When Financing Multiple Properties
You won’t be able to obtain government-insured loans, such as FHA and USDA loans.
Down Payment and Loan-to-Value (LTV)
A down payment is generally required of at least 15% or higher, with a loan-to-value (LTV) of 85% or less. The down payment and loan-to-value (LTV) ratio have an inverse relationship. So if your down payment is 25%, your LTV will be 75%. The down payment and LTV requirements vary by property type and the number of units.
You’ll likely need at least six months’ worth of payments or PITI (principal, interest, taxes, and insurance) per property.
A maximum debt-to-income (DTI) ratio of 45% is usually required, though you’ll get the best loan terms with a lower DTI.
Typically you must have a credit score no less than 620, though a credit score of 720 will get you the best rates.
Since you’re taking out multiple home loans, you can expect slightly higher interest rates to compensate for the additional risk.
Private Mortgage Insurance (PMI)
Luckily, you won’t have to pay any mortgage premiums because you’re putting 20% down to finance your multiple properties. PMI is required when you put less than 20% on a home loan.
How much mortgage can I afford?
The first step in buying a house is determining a realistic budget. Start with this handy calculator to get an estimate of how much you can qualify for, and how a home loan will fit into your monthly payments. The calculator takes into account your income, the purchase price, and the total monthly payment. Try a couple of scenarios to see how purchasing multiple properties might affect your finances.
What if my original loans were handled by another bank?
It doesn’t matter – you’ll still be eligible for the program for as long as you finance two or more properties.
What is the LTV requirement?
Your loan-to-value ratio is dependent upon property type and number of units. For a single-unit investment property, a 15% down payment is generally required for an LTV of 85%. Whereas, for. 2-4 unit investment property, a 25% down payment is generally required for an LTV of 75%. You can learn more about the LTV requirements here.
Is an ARM right for me?
If you intend to sell the properties within 10 years or less, an ARM might be in your best interest. An ARM usually has a lower initial interest rate than a fixed-rate mortgage.
Pair it with Other Programs
A pre-approval makes the house-hunting process simpler for you. Show sellers and real estate agents you’re approved for mortgage financing. That way, it doesn’t matter if another bid is higher; yours will be legitimate.
Also known as the DSCR (Debt Service Coverage Ratio) loan, lets experienced investors use their property’s cash flow to qualify for a mortgage. No tax returns, pay stubs, or other proof of income are required.