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Getting loan for rental property

I am considering buying a property as an investment. I had a foreclosure over 3 years ago. The property is currently rented and producing income. I can put down up to 20% down. My FICO score is 690. Which mortgage loan(s) is best for my situation if any?Any guidance in this matter is greatly appreciated.VinceNashville, TN by winwin_102@yahoo.com from Garland, Texas. Sep 22nd 2013 Reply


Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,237 contributions

Yes, as long as you qualify, you could probably use a FHA loan to take cash out of your residence and use the funds to purchase the rental property.

Sep 23rd 2013
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John Moran (TheHomeMortgagePro)
#9 ranked lender in Arizona - 658 contributions

Vince, FHA Streamline loans do not allow for cash out. A standard FHA refinance allows for cash out, but it sounds like you had better consult someone local with your exact situation to best determine whether you would qualify for it (how long have you been in your house, what is your estimated value, credit situation, etc.). There are lots of professionals waiting to take your call, just find a reputable one and explain your situation to them.

Sep 23rd 2013
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,237 contributions

PS> you can only use FHA for a maximum of 85% loan compared to the current value of the home if you are taking cash- out.

Sep 23rd 2013
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Joe Metzler (JoeMetzler)
#2 ranked lender in Minnesota - 3,852 contributions

Contact a local mortgage broker, give them your full information, and let them zero in like a laser beam on your options.

Sep 23rd 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

Cash out refi on other property may be your best option.

Sep 23rd 2013
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,550 contributions

The only loan product you can use to purchase a rental property (1-4 units) is conventional financing. Per the guidelines, you will need to wait 7 years past the date the of the foreclosure. FHA allows for a purchase after 3 years, but its' owner occupied only, so if your purchasing a 4plex, and you intend to occupy one of the units, then FHA will allow it... VA allows a owner occupied purchase after 2 years, but most lenders will still make you wait 3 years. If the home you live in has no mortgage, then FHA allows for 85% Loan to value "cash out" Transaction after 3 years. If you can pull enough cash out of your home, you could pay cash for the investment property. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Sep 23rd 2013
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Kiernan Brown (KiernanBrown)
#51 ranked lender in Michigan - 149 contributions

Most investment properties are purchase using Conventional financing. Unfortunately, Fannie Mae and Freddie Mac require 7 years past a foreclosure. You will most likely need to find a Portfolio Lender to help you with this purchase.

Sep 23rd 2013
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John Moran (TheHomeMortgagePro)
#9 ranked lender in Arizona - 658 contributions

Unfortunately, your current situation won't allow you to purchase an investment property (at least from any program I have heard of). Many loan options are easing their restrictions a little on foreclosures and bankruptcies, but only for primary residences. Investment properties are a different breed and typically require 7 years from foreclosure and credit scores in the 700s. The only scenario I can imagine is if you bought a multi-unit property and lived in one of the units. Check with a local mortgage professional regarding the guidelines on that. Best of luck Vince!

Sep 23rd 2013
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Richard Woodward (RichardWoodward)
#40 ranked lender in Texas - 106 contributions

I have to agree with John on this one. For an investment property you will need to wait for 7 years from the recorded release date of your foreclose in order to purchase an investment property. Primary residences to allow for 3 years but only with extenuating circumstances.

Sep 23rd 2013
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,237 contributions

Agree with the others, unless you have a really good reason for the foreclosure (like death or serious illness) you likely cannot qualify for a "regular" mortgage program - especially for an investment property. If this were going to be your new residence there might be an option using a FHA loan. Check with local banks and credit unions and see if they have any internal loan programs where they might consider your situation. Start with where you do your banking. If you have the ability to borrow from your 401k or an insurance policy, that might be a bridge until the 7 years is up. Other than that, you'll have to go to a nontraditional lender where you'll likely be charged much higher rates and fees. Good luck

Sep 23rd 2013
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Charlie Sparks (CharlieSparks)
#9 ranked lender in New Mexico - 397 contributions

Another option is a self-directed IRA. If you have an IRA, instead of investing these assets in mutual funds, bonds or stocks, you are allowed to invest in real estate. Not many lenders will make loans on real estate purchased in this way but if you search for 'self directed ira tennessee' you should come up with some options.

Sep 23rd 2013
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Josh Lund (Josh_Lund)
#47 ranked lender in Minnesota - 113 contributions

What everyone else has said is correct. You will have to wait 7 years after the foreclosure to purchase an investment property

Sep 23rd 2013
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Thank you for all who took time to response to my question.How about FHA refi? I currently have 1 property which I fully paid off. Can I use FHA streamline to cash out and use that to pay for the other investment property?Thanks!Vince

Sep 23rd 2013
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