Need a mortgage on rental

[Bob Freitag]

we closed on a rental house recently that we paid cash for. I want to get a mortgage on the property but am having a hard time finding a bank or lender that will offer more than 65-75% of the purchase price as we have not owned it a year yet.  We got a great price on the house and then put additional money into it to rehab for rent.    

Does anyone know of a lender that will look at the property and my credit and loan more money at competitive rates?

[Andrew Postell]

@Bob Freitag what you are describing is a common element to investment homes. The "Conventional" loans (Fannie Mae and Freddie Mac, if you recognize those names) have a rule of 75% Loan Limit on the home in comparison to how much it's worth - other wise know as "Loan-to-Value". That means that banks are not allowed to go higher than 75% on a conventional loan (with some rare exceptions that might apply to you but more on that in a second). The banks are allowed to be more strict on it if they want to though. So if a bank only wanted to lend 65% then they could. So it's important to find a bank that doesn't have any "overlays" (that's what my industry calls the extra rules banks put on top of Fannie or Freddie rules). So 75% should be what you should expect in refinancing an investment property. On a side note, purchasing an investment property you only need 85% LTV or 15% down if needed. They are a little less strict when purchasing the home but once you own it 75% will be the hard ceiling on a Single Family Home (it's lower on duplexes, triplexes, etc.) Now, on to the exception I hinted at earlier and I think this will apply to you - There is one scenario where a bank will allow more than 75% of the purchase price - and that's if you bought the home with cash! It's called a "Delayed Financing" loan. You can get 100% of your purchase price back with a Delayed Financing loan. Again, every bank does not offer this. What Delayed Financing is best described as is a loan where you can recoup 75% of the ARV or the purchase price of the home, whichever is the lower figure - AND the transaction has to be done within the first 6 months of you owning it *WHEW* I know that's a lot but here's the math: Let's say you bought the home for $50k and put $50k into the home. The home appraises for $100k. Remember the rule? 75% LTV or Purchase Price,which ever is lower - so you can get 100% of your purchase price back because it's less than 75% ARV. I hope that makes sense. Different math is you bought the home for $50k, put $10k into it and it's worth $65k. you are limited to receiving back 75% of the ARV since 75% would be $48,750.