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Fanny 5-10 rules

Need the correct answers to (if you are not positive, please note so in your response, thanks) I have 4 mortages (own 11 properties), looking to buy another (5th mortgage)-Are the 6 months of reserves, on just the FINANCED properties, or all properties you own? -If I just bought (and financed) a property a couple months ago,is the income from that property used in your debt ratio if I try to buy another now? If it does not count, how long before they reconize it?-When calculating retal income for debt ratio, do they use 75% of the rental income? Even if I can show them proof that I have a 99.9% occupancy rate for over 10 years and a 20-24 month baclog of signed leases on all properties?-What is the max debt ratio they allow for 5-10 properies?-is the interest rate higher when you go over 4 mortgages?-If my daugherter purchases a rental (loan in her name only). how long would it before fannie will reconize the income? She is a very young doctor and the rental is $500K (single family), She would qualify, but would tap her out as far as getting a loan to buy her own place (she rents right now and may want to buy in a year or so). Thanks!!!! by vlady1_626_887 from Rochester, Michigan. Nov 2nd 2012 Reply


Stephen McWilliam (StephenMcWilliam)
#137 ranked lender in Florida - 48 contributions

I might suggest that you contact a mortgage professional in your area for specific answers considering that many lenders will have overlays that will change the underwriting guidelines. I will confirm that any income not represented on your tax return (ie. newly purchase properties) will be factored at 75% of the lease value. Additionally, in your daughter's instance 1 property; once she's had 1 full year of rental income included in her income tax the income will be considered at 100% of what is on her tax return for qualification on another mortgage loan.

Nov 3rd 2012
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Manuel Gonzalez (mmortgage1)
#90 ranked lender in New Jersey - 90 contributions

Investment: 6 months reserves on subject property, plus 2 months reserves for each other residential property owned, excluding the primary residence or those owned free and clear.Provided to you by Home Buyer Manual

Nov 3rd 2012
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Joe Metzler (JoeMetzler)
#17 ranked lender in Minnesota - 4,843 contributions

5-10 properties is technically allowed. Must have 6 months PITI in reserves for EACH property. NEW rental property income is calculated at 75% of provable rent - but BEWARE, you better be able to prove around 6 months worth of rent, or they will likely not accept it as acceptable income. Once the income is on a tax return, you are good. 45% debt-to-income ratio max. Rate is same as other investment properties. Contact a local NON-BANK lender for most assistance. Note, not every lender allows over 4-units. www.MNBestRates.com

Nov 3rd 2012
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Mike Silkworth (msilkw_195_870)
#29 ranked lender in Michigan - 531 contributions

Do yourself a HUGE favor and find a lender near you that specializes in financing for investors. The way most of us learn the rules on these kind of loans is by getting burned by not looking for criteria that we don't know about. Some of the answers:1) Number of properties - a 5th is allowed by Fannie guides, but limitations by lenders varies. 2) The property you just bought will need a signed lease and proof of deposit and first months rent - will be counted at 75% - The balance of your properties will come from an analysis of your last two years schedule E's with the non-cash expenses not taken into consideration - remember - all properties you own will be taken into consideration, this will likely help you because you don't have a mortgage expense and it sounds like you have a positive income from your Real Estate portfolio. 3) Max debt ratio is not that simple, it will need to be run through Automated Underwriting - probably 45% 4) Interest rate will not vary based on number of properties - it will be based down payment and credit score. 5) Daughters question - It is one year right now, but beware, it is always scary making long term decisions based on today's guidelines - if I know anything for sure, it is that guideline changes are certain

Nov 3rd 2012
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Mike Silkworth (msilkw_195_870)
#29 ranked lender in Michigan - 531 contributions

Do yourself a HUGE favor and find a lender near you that specializes in financing for investors. The way most of us learn the rules on these kind of loans is by getting burned by not looking for criteria that we don't know about. Some of the answers:1) Number of properties - a 5th is allowed by Fannie guides, but limitations by lenders varies. 2) The property you just bought will need a signed lease and proof of deposit and first months rent - will be counted at 75% - The balance of your properties will come from an analysis of your last two years schedule E's with the non-cash expenses not taken into consideration - remember - all properties you own will be taken into consideration, this will likely help you because you don't have a mortgage expense and it sounds like you have a positive income from your Real Estate portfolio. 3) Max debt ratio is not that simple, it will need to be run through Automated Underwriting - probably 45% 4) Interest rate will not vary based on number of properties - it will be based down payment and credit score. 5) Daughters question - It is one year right now, but beware, it is always scary making long term decisions based on today's guidelines - if I know anything for sure, it is that guideline changes are certain. Good Luck

Nov 3rd 2012
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John Desmond (jdesmond)
#16 ranked lender in Louisiana - 20 contributions

I agree with the other responses. Best option is to contact a lender and talk directly to them.

Nov 5th 2012
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