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Id like to use the equity in my home to purchase a rental property. What kind of terms are available for this?

Purchase price 1.2M. Listing is 4 units. I will not be living on the premises. My credit score is 710 and I have about 230K in equity in my current home. Thank you. by kristian650 from Portland, Oregon. Jul 26th 2016 Reply


Lorne Harvey (lorneharvey)
#81 ranked lender in Washington - 418 contributions

Definitely a non-conforming type loan. Sounds like a jumbo loan if they will do that.Maybe some of the jumbo lenders can help out on the purchase.I can help you with the refinance to cash out for the down payment. Please look me up if you would like to chat about that. I can also look into the jumbo too, I just don't get much of that in the Walla Walla area. Thank you

Jul 26th 2016
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Scott Fix (ScottFix)
#1330 ranked lender in California - 184 contributions

Be sure to run all of the numbers on the rental property before leaping into it. Vacancy rates, prevailing rents, operating expenses etc. Not a huge fan of leveraging your primary residence to go into debt on an investment property. Please go over the numbers with a fine tooth comb. Have the seller provide you with disclosures and bank statements or a set of books showing all associated income and costs over the past 3 to 4 years. Additionally, look very seriously at the rents for similar properties in the area. Make sure that your income minus vacancy rates and operating expenses will exceed your mortgage on the 4 unit dwelling. If not or very close, bail out. Crunch the numbers and see if they work before taking the plunge. If you are looking for SFR or Multi-family, look into states with much lower costs and sustainable rents like Ohio or Georgia. Pick up a SFR for 60K and rent the home for 700 per month. Just a thought for a possible better option with dramatically less risk. All the best, Scott.

Jul 26th 2016
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,225 contributions

At best typically the combination of what you owe on your first mortgage plus the new equity loan could not go over 90-95% of the home value. Suggest you check with local community banks and/or credit unions for the highest LTV options. Then you can use those funds to purchase the rental. However, typically you'll need reserves in addition to the downpayment - especially for a jumbo mortgage and even more so if you can even find financing for a rental property. Good luck.

Jul 27th 2016
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Justin Murray (JustinMurray)
#102 ranked lender in Illinois - 172 contributions

We will lend 75% of the purchase price. You will need 25% down payment at a minimum if you are not going to live in the property. You will need other funds as the equity in your home is not sufficient. Please advise, thank you.

Jul 27th 2016
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,927 contributions

Much more info needed, but in general, there are loans available for multi housing.. but because of the list price, you will be looking in the Jumbo market.. and Investor Jumbo financing will typically require 25% to 30% or more down.. so unless you can get your hands on $300K - $360K.. you're probably not going to be able purchase this 4plex.. Also, even though you have $230K equity in your current home, then unless you're a Veteran with VA benefits available, you cannot do a 100% Loan to value, cash out refinance.. typically, if you are looking at a cash out refi to get your hands on your home's equity, you are maxed out at 80% for Conventional, and 85% with FHA... Again, much more info needed, but based on the limited info you provided, it's not looking good.. 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. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Jul 28th 2016
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