Obtaining a Mortgage with Multiple Investors

[Forrest Garner]

This might sound like a novice question coming from a novice investor. I have a group of 5 people looking to pool money together to purchase our first rental property. For simplicity, let's say each person puts in $5k for a total of $25k equaling a 20% down payment on a $125k house. Sounds simple enough....

However, I can't find relevant information on how this group obtains a mortgage for the balance of the $125k purchase. From my research it sounds as if each person would have to co-sign the loan, which puts the $125k liability on each person's Debt-To-Income ratio. Is this true? This seems like handcuffs for any type of expansion or even buying a live-in home for all the young investors. I'd think in a perfect world, each person would just assume $25k of debt (I know that's not how bank would like to think of it).

I've thought about the option of our Multimember LLC applying for the mortgage, but it sounds like no bank will loan to a LLC without the LLC having some kind of cash flow and/or asset history.

So I guess my overall question is, can you enlighten me? Can multimember real estate investment LLCs form without wealthy partners in the beginning? Where is the opportunity for young investors to pool some money and try their hand at obtaining a rental property?