Investor Down Payments and Rates for Multiple Mortgages

[Shai Knight-Winnig]

I've been browsing for a while to try to figure out what are typical down payment and interest rates for loans as you increase the number of loans in your portfolio and I still can't get a good grasp on it.  These limits wouldn't affect me for a while, but I'm trying to plan things out and I can't tell just how much worse mortgage terms get as you increase the number of mortgages

Here is my understanding so far (based on single family home terms),

Your primary residence does not count for these investor limits (True or false?).

1-4 properties: Down payment of 20%, rates are 0.5% to 1% higher than for owner occupied (is this roughly correct?)
5-6 properties: I see some people say 20% down, some people say 25% down. It sounds like the interest rate gets even higher. Also here you have to show 6 months PITI, credit score above 720, maybe some other criteria (I'm starting to get confused)
7-10 properties: Here, my confusion increases substantially. 

Can people who know better than me, please help me figure out what the correct guidelines are?  If I can fill in all the blanks I'll write it up really nicely so others can reference.  

Is this even the correct breakdown for where rules change?  Or should the categories be something like: 1-4, 5-6, 7-8, 9-10?  Or 1-4, 5-10?

Thanks!

[Chris Mason]

Originally posted by @Shai Knight-Winnig:

I've been browsing for a while to try to figure out what are typical down payment and interest rates for loans as you increase the number of loans in your portfolio and I still can't get a good grasp on it.  These limits wouldn't affect me for a while, but I'm trying to plan things out and I can't tell just how much worse mortgage terms get as you increase the number of mortgages

Here is my understanding so far (based on single family home terms),

Your primary residence does not count for these investor limits (True or false?).

1-4 properties: Down payment of 20%, rates are 0.5% to 1% higher than for owner occupied (is this roughly correct?)
5-6 properties: I see some people say 20% down, some people say 25% down. It sounds like the interest rate gets even higher. Also here you have to show 6 months PITI, credit score above 720, maybe some other criteria (I'm starting to get confused)
7-10 properties: Here, my confusion increases substantially. 

Can people who know better than me, please help me figure out what the correct guidelines are?  If I can fill in all the blanks I'll write it up really nicely so others can reference.  

Is this even the correct breakdown for where rules change?  Or should the categories be something like: 1-4, 5-6, 7-8, 9-10?  Or 1-4, 5-10?

Thanks!

 Mix of old info and new, good and bad, in that post. Just the FNMA guidelines alone are over a thousand pages, not realistic to summarize in a single post, but I'll try to hit the big ones.

Primary residence does count towards the limit, but if the subject property is a primary residence then it does not apply.

25% is the standard for 2-4 unit investments, as low as 15% is OK for SFR, but the rates are uglier than even other investment property mortgages.

When the subject property is a rental, FNMA will want 6 months of PITI in reserve. In addition, there will be reserves required for the balances of all other investment properties that have mortgages. 1-4 properties, 2%, 5-6 it's 4%, 7+ it gets ugly at 6%. As of 2019, most banks will allow the use of your 401k to check that box.

Here's a checklist from fanniemae.com for some of the other stuff you mention, like FICO scores, ignore the "manual" column and focus on "DU": 

https://www.fanniemae.com/content/tool/multiple-financed-properties-checklist.pdf

Pragmatically, the FICO score thing typically isn't a big deal... if you have 6 mortgages that you're paying on time, and don't have a bunch of maxed out credit cards, you will typically automatically have the 720 FICO score.

That's all just guideline stuff, so far. IRL what you will see is fewer and fewer banks will work with you (at all) as you cross 4 financed properties, and then even fewer after number 6. There are still plenty that will, it just might not be the first phone call you make.