Conventional Investment loan with 15% down?

Question

Hello! I just listened to the latest episode of the BiggerPockets OG podcast where the guest was referencing conventional investment loans with a 15% LTV. Does anyone know where such a lender might be? Looking for long-term conventional refinance (potentially cash-out) for a SFH. DTI and Credit scores are excellent and the property has been owned for more than one year.

I realize that there is a "Find a Lender" function on this website, but I really don't want to be spammed with marketing emails. (If that's not how the Find a Lender functions works then I'm totally open to it.) Would prefer to hear from someone who just used a lender and had a good experience. Located in Tennessee but property is in AL. Thanks!

Amber Stout · Answer

Hey Denise, I work with one lender that is 85% LTV for refinance given great credit, etc. For cash out, it would be 80% LTV. I'll send you a private message.

Jay Hurst · Answer

The 15% is only for purchasing a single family property. Really anyone should be able to do it bit for some reason not everyone does. But, for a cash out refi you would be limited to 75%. (but, you can do a NO cash out refi up to 85% with Freddie)https://singlefamily.fanniemae.com/media/9386/display

Denise Carringer · Answer

Thanks so much for the responses! Yes, I did mean 85% LTV, sorry about that. Our typical strategy is to purchase and renovate a property with cash (or Lines of Credit), stabilize it with good renters, then eventually refinance on a 30 year conventional for a more secure, long term investment hold. We have high personal income with no consumer debt, so conventional loans are typically more favorable and DTI hasn't been an issue. We don't want or need to grow larger than 10 investment properties since this is really just a side hobby and retirement security. I have a great lender locally that is a pleasure to work with, but ran into a situation recently that involved an unfavorable appraisal. We ended up having to leave more cash in the property than I wanted to. I heard the Bigger Pockets episode around the same time and thought it couldn't hurt to have a lender in my back pocket that could offer that option should the situation arise again. I really do appreciate the replies and will reach out when the time comes to those who messaged me. Thanks!

Charlie Gonzalez · Answer

Hi Denise!I lend all across the country. Tennessee and Alabama included. I have a 85% DSCR option, so we wouldn’t need to even see you income nor verify employment information. This allows us to close the loan much quicker for you. We just need to make sure the property have a 1.0 ratio. Meaning rent must cover PITIA completely. Hence the 1.0 ratio. Id be glad to set you up with one of my mortgage brokers and we could help you out with any questions!

Jay Hurst · Answer

well, it is actually in how the loan is structured. The way we do it is a first mortgage at 75% so that lowers the LLPA to about half, then do a 10% second mortgage out of our portfolio. This gets you to 15% down but with more or less the same rate on 75% as you would if you were putting down 25%.

Denise Carringer · Answer

Yes! Thank you! That's the kind of info I needed to hear :) No wonder my lender doesn't talk about it!

Russell Brazil · Answer

The LLPA for 85% ltv om an investment is 4.125 points. So it would not make much sense to put only 15% down if you have to pay an additional 4.125% in points to make it happen.

Steffen Cushing · Answer

pretty much any lender that follows regular conventional guidelines could do these, however the pricing with just 15% down is not the best and if you are able, likely better to put a little more down for better terms.

Bernard Mcgee · Answer

Good morning Denise. I know which product that you are referring to. the conventional mtg product has the following features. 1. minimum 15% down payment 2. 30 yr fixed term 3. rehab and repairs can be included in financing 4. borrower can be a first time investor. 5. no prepayment penalty. 6. the contractor will receive an initial draw at the closing table. 7. This product is available in All 50 States. 8. I am licensed to do business in All 50 States. 9. Small balance loan amounts can be done. Please DM me for more information on the product and to discuss your project. Best Regards

Doug Smith · Answer

They exist, but be mindful of your cash flow. I this era of high taxes, insurance, and historically normal rates (notice I didn't say high rates as they are currently somewhat the historical norm), it's hard to do a higher loan-to-value deal and get the rents to cover the PITI + any HOA. From a lender's standpoint, I'm not seeing many 80%+ rental deals covering the debt service lately.