Investor Mortgages Guidelines and Hurdle Jumping

Today’s mortgage rates and selection of properties provide investors some nice latitude to satisfy their demand for land. For those investors out there looking to truly clean up in the marketplace, there are a few caveats and general guidelines as far as the maximum amount of properties a borrower can have financed and still purchase new properties.

First of all, a borrower can have a maximum of ten financed properties in total. For the first four properties there are no extra hurdles to qualifying. A couple other items of note:

  • Properties owned by joint applicants count toward the cumulative total
  • The first unit requires a 15% down payment while units 2-4 require a 25% down payment

All pretty standard stuff; no real surprises here, but there are some extra hurdles these investors will have to clear when it comes to mortgaging properties 5-10 in regard to credit score and cash reserves.

Once a borrower exceeds the four financed property count, the general guidelines are as follows:

  • The first of these units purchased requires a 25% down payment
  • The second to fourth units purchased require a 30% down payment
  • A minimum credit score of 720 is required
  • The borrowers must show six month’s worth of payment reserves for each property — this includes the new property being acquired; and as far as the definition of payment, we refer to our old friend PITI: principal, interest, taxes and insurance
  • The borrower’s radar must be free of bankruptcy over the preceding seven years and have committed no late mortgage payments in the preceding seven months

Again, at the end of the day…nothing too unreasonable here – but when you’re building your real estate empire, always good to know what’s ahead. Let me know if you need any more information and/or clarification.

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