Investment Property Loans
All borrowers will have to sign a Business Purpose & Occupancy Statement before the funding to show that they declare that the property already is or will be for commercial use or for investment purposes only. All the loans, therefore, will undergo a thorough evaluation to determine the loans conform to this requirement.
The specifications and procedures are there to serve as the key foundation for qualifying. They will evaluate each and every borrower entirely on an individual basis.
Investor Advantage loans that do not meet the provisions of this Product Eligibility Product will be carefully reviewed on a case-to-case basis. All applicable justifying and compensating factors to a policy exception should be fully documented and will be later reviewed and taken into consideration prior to granting or denying any request for purchase approval.
The overlays are meant to reference and support Fannie Mae’s seller Guide. There is a slight difference between our Overlays and Fannie Mae guidelines.
ELIGIBILITY for INVESTMENT PROPERTY LOANS
These are the qualifications for different categories of people:
- U.S. Citizens
These are people who permanently reside in the United States.
- Permanent Resident Alien
Permanent Resident Aliens are people who permanently live in the United States. You should produce a legible front and back copy of the borrower(s) valid Green Card.
- Non-Permanent Resident Aliens
Non-Permanent Resident Aliens must fulfill the following requirements
- Foreign nationals
A foreign national is a person who is not a US citizen and/ or he or she does not permanently live in the United States. Also a foreign national can be ineligible if he or she is a resident of a country that may not to do business with the US companies. This is based on the authority stipulated by the US government.
In addition, they should have a valid passport and Visa to step on the US soil. They will not require borrowers from countries that participate in the State Departments Visa Waiver Program to give a valid visa.
- First-time investor
Unless the borrower is buying a multi-unit property, the subject property value cannot surpass the property value of the borrower’s primary residence. They must deduct 5% from the Maximum LTV for the first-time investor. Most importantly, will also not permit the No Ratio program.
TRANSACTION ELIGIBILITY for INVESTMENT PROPERTY LOANS
The key requirement is that the borrower is financing a property strictly for commercial use. Aso, they will require he/she to sign a Certification of Business Purpose form or a Non-Owner Occupancy agreement.
Because of that, underwriting must carry out additional steps as deemed necessary to further assess the reasonableness of the borrower’s certification.
THE ELIGIBLE TRANSACTIONS INCLUDE:
- Purchase for investment property loans
The maximum contribution permitted to an interested party is 3%
Besides that, they will not permit Non-Arm’s Length Transactions.
- Rate/term refinance for investment property loans
This is when the new loan amount is limited to the payoff of the present first lien mortgage & closing costs.
Money to the borrower should not exceed $2000 or 1% of the principal amount of the new mortgage.
If you own the property for less than 6 months, they base LTV on the lesser of the purchase price or current appraisal.
- Cash-out refinance for investment property loans
A Cash-Out Refinance transaction allows the borrower to pay off the existing mortgage by obtaining new financing. It also allows the property owner to mortgage a property that currently has no loan. The borrower can receive funds at closing so long as they do not exceed the program requirements
For a Cash-Out Refinance, the borrower must have owned the property for at least 3 months prior to application date.