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8/9/2009 12:51:40 AM
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catboy44106
Posts 2
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Hi,
As of Aug, 2009, what are the big lenders requiring as a downpayment (range, including all costs) for an investment property, such as a duplex in the Cleveland Heights, OH (as a % of the house)? Numbers seem all over the place, thanks!
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8/10/2009 2:01:13 PM
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MortgageMarvel
Posts 38
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For most lenders, product parameters like the maximum loan-to-value ratio (LTV) for a certain loan purpose (purchase, refinance, cash-out refinance) and occupancy (primary residence, second home, investment property) are defined by the primary purchasers of mortgages, Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac's current guidelines will not allow the maximum LTV for a 2-4 unit investment property to be greater than 75%. Because most large lenders sell their loans to Fannie Mae and Freddie Mac, you should find the down payment requirement for the transaction you mentioned below (2-unit investment property) to be 25% of the purchase price.
There are a couple of reasons why you may be getting varying answers: (1) Product guidelines have changed rapidly in recent months because of the current issues in the real estate market. Not too long ago, Fannie Mae and Freddie Mac would allow an LTV of 85%, and before that even 95%, for a 2-unit investment property. Some lenders may still be trying to catch up with the industry's new requirements and could be reflecting outdated information; (2) There are also some lenders that hold loans in their portfolio, in which case they are not subject to Fannie Mae and Freddie Mac's requirements, but rather design products based on their internal risk tolerance. It's possible that some portfolio lenders will allow a higher LTV for a 2-unit investment property.
If you are considering applying with a lender and plan on putting down less than 25%, I would recommend that you call the lender before submitting your application to be sure they will complete the financing on the terms you are looking for.
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