Mortgage Requirements Detroit & Good Real Estate Media

Detroit, Michigan
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Mortgage Requirements Detroit & Good Real Estate Media

Jack Little
Member since 2023 · 3 posts · 0 votes

Hey Detroit Investors, was wondering what the typical requirements are for mortgage approvals in the area as I am going to be out of state investor new to the space. Not sure if their are exact numbers for things such as D/I ratio, credit score, and reserve funds, time at current job for mortgage approval. Was hoping to get some ball park numbers people have been seeing for themselves on their own investments or what mortgage brokers are considering as the bare minimum for approval requirements in todays economy. Any help is greatly appreciated as the mortgage aspect has been the most unclear to me. 

Secondly would really appreciate any good Detroit related blogs, websites, podcasts for real estate as well as any good media for understanding the lending aspect of investing.

Thanks in advance for the help look forward to communicating further with any one in the space that is wanting to swap some information opinions and goals and build a further business relationship .

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  • Andrew PostellPro Member
    Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
    2y

    @Jack Little 

    Generally speaking there are 2 main types of loans for investors: “Conventional” and “Portfolio”

    Conventional - I'll define these as loans that come from Fannie Mae and Freddie Mac (if you recognize those names). These loans are all 30 year fixed rate loans. They have the lowest rates we can find and since they are 30 year fixed...they allow us to cash flow better...which helps us qualify for other loans later. The draw back to these loans is that they are more paperwork heavy than the other "portfolio" types of loans....but if you have ever received a loan on your primary home, it's likely that you will go through the same type of paperwork here with conventional lending. Fannie/Freddie money = Fannie/Freddie rules. NOT the bank's own money.

    Portfolio - I'll define these loans as loans that come from the bank's own "portfolio" of money. Sometimes referred to as "commercial" loans. Sometimes called "DSCR" loans. These loans are a lot more flexible than "conventional" loans. Bank's money = Bank's rules. If they like you, then maybe they will lend to you. But since there is a limit to how much money the bank has access to....their rate will be higher...or maybe have a prepayment penalty. Some banks will only lend a 20 year loan instead of a 30 year (which would make your payment higher since you have to pay it back sooner). We usually try for the 30 year loans here...sometimes the 40 year ones and the 20 year ones might make sense depending on the property. In this area, you don't need a job nor job history.

    The baseline number I would suggest to use for either loan is 75% LTV. Meaning, 25% down (or leaving 25% equity when you Refinance with the BRRRR Method).

    For anything locally related, try some local real estate meetup groups. Meetup.com is a good resource for those but some of the groups will also post here on Bigger Pockets Marketplace too. If you can't meet in person then use the facebook groups.  There are thousands and thousands of members in some of those Detroit/Michigan groups. But post locally for this. That’s the best bet.

    Oh, and if you want to watch a quick video on investment property lending try this one HERE. 

    Thanks!

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  • Travis Biziorek
    Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
    2y

    Jack, requirements in Detroit aren't going to be any different than other markets. 

    One big difference in Detroit is it's a very cash heavy market at the sub $100k purchase price level. You can refinance after purchase but a lot of sellers grossly favor cash offers at those levels.

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  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    @Jack Little building on what @Travis Biziorek wrote, you should also define if you are investing in the Detroit suburbs or the City of Detroit itself.

    Really difficult to find sub $100k properties in the suburbs now, so if your focus is there, the $100k value challenge is moot.

    Travis has a nice Detroit centric blog, you can also follow this one: https://logicalpm.com/category/property-owner-blog/

    Logical Property Management4.9453 Reviews
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