Small loans - who lends on property under 100K?

[Tom Camarda]

Greetings all,

I'm finding some good low cost, cash flowing properties in Ohio. Problem is, my usual lenders will not lend on these because their minimum loan is 100K.  Is there an option out there for conventional loans for buy and hold investors who want properties under 80K?

Thank you,

Tom Camarda

[Rafael Norat]

Try to find local credit unions in that area. They should lend below $100k. I have similar situations in PA where typical units are $30k or so. Local lenders work with the market.

[James Masotti]

Tom Camarda - I agree with the others. Lots of lenders out there will go under $100k since there are many markets where that is a "normal" house price. Shop around for community banks in Ohio where you are looking or try credit unions. This is where I've had the best luck. I'll be calling a ton of banks next week to start looking for a new lender since mine notified me last week they changed their lending criteria. I have no doubt I'll find someone.

[Tom Camarda]

Community Banks and credit unions. Great ideas. Thank you guys!

[Michael Yap]

It seems certain local community banks in Cleveland (Westfield and Pioneer) have policies that limit their lending to Ohio residents. Has anyone else encountered this?

[Bill Bockwoldt]

I used Quicken Loans on several rental properties and they go below $100k loan sizes. They charge extra, but they also had no issue going beyond the 5 mortgage limit imposed by many banks (some stop at 10, etc.). Try calling them and see what they say. Good luck.

[Ryan Mainwaring]

@Tom Camarda I work with a few lenders that will go below 100k, pm if you are interested.

[James Wise]

Originally posted by @Tom Camarda:

Greetings all,

I'm finding some good low cost, cash flowing properties in Ohio. Problem is, my usual lenders will not lend on these because their minimum loan is 100K.  Is there an option out there for conventional loans for buy and hold investors who want properties under 80K?

Thank you,

Tom Camarda

 Tom,

Citizens bank, Wells Fargo & MB Financial will all lend on sub 80k properties. MB will actually loan on sub 30k properties if you were going that route.

[Mushfiq S.]

Originally posted by @James Wise:

Originally posted by @Tom Camarda:

Greetings all,

I'm finding some good low cost, cash flowing properties in Ohio. Problem is, my usual lenders will not lend on these because their minimum loan is 100K.  Is there an option out there for conventional loans for buy and hold investors who want properties under 80K?

Thank you,

Tom Camarda

 Tom,

Citizens bank, Wells Fargo & MB Financial will all lend on sub 80k properties. MB will actually loan on sub 30k properties if you were going that route.

 Would these banks charge additional points or other fees in order to cover the cost of underwriting?

[James Wise]

Originally posted by @Mushfiq S.:

Originally posted by @James Wise:

Originally posted by @Tom Camarda:

Greetings all,

I'm finding some good low cost, cash flowing properties in Ohio. Problem is, my usual lenders will not lend on these because their minimum loan is 100K.  Is there an option out there for conventional loans for buy and hold investors who want properties under 80K?

Thank you,

Tom Camarda

 Tom,

Citizens bank, Wells Fargo & MB Financial will all lend on sub 80k properties. MB will actually loan on sub 30k properties if you were going that route.

 Would these banks charge additional points or other fees in order to cover the cost of underwriting?

Of course, nobody works for free.

[Mushfiq S.]

Originally posted by @James Wise:

Originally posted by @Mushfiq S.:

Originally posted by @James Wise:

Originally posted by @Tom Camarda:

Greetings all,

I'm finding some good low cost, cash flowing properties in Ohio. Problem is, my usual lenders will not lend on these because their minimum loan is 100K.  Is there an option out there for conventional loans for buy and hold investors who want properties under 80K?

Thank you,

Tom Camarda

 Tom,

Citizens bank, Wells Fargo & MB Financial will all lend on sub 80k properties. MB will actually loan on sub 30k properties if you were going that route.

 Would these banks charge additional points or other fees in order to cover the cost of underwriting?

Of course, nobody works for free.

 Yes. No on works for free. I was saying in comparison to a loan for say about $200k versus one under $50k. Would they have additional costs that are not present in larger loans?

I do not want to go through the underwriting if the costs are extremely high.

[James Wise]

Originally posted by @Mushfiq S.:

Originally posted by @James Wise:

Originally posted by @Mushfiq S.:

Originally posted by @James Wise:

Originally posted by @Tom Camarda:

Greetings all,

I'm finding some good low cost, cash flowing properties in Ohio. Problem is, my usual lenders will not lend on these because their minimum loan is 100K.  Is there an option out there for conventional loans for buy and hold investors who want properties under 80K?

Thank you,

Tom Camarda

 Tom,

Citizens bank, Wells Fargo & MB Financial will all lend on sub 80k properties. MB will actually loan on sub 30k properties if you were going that route.

 Would these banks charge additional points or other fees in order to cover the cost of underwriting?

Of course, nobody works for free.

 Yes. No on works for free. I was saying in comparison to a loan for say about $200k versus one under $50k. Would they have additional costs that are not present in larger loans?

I do not want to go through the underwriting if the costs are extremely high.

 Sounds like your next step would be to contact some lenders and request a fee sheet. Then decide if the cost to buy a property in that range is worth it to you or not.

[Chris Low]

We've never had trouble finding a lender for property under $100,000 but we have had some balk at loans below $60k. That said, we never go through big banks - always local, credit unions, or mortgage brokers who can pull from a variety of lending sources including conventional.

[Justin B.]

Your smaller banks.  The local or statewide ones will loan almost any amount.  Credit unions might work too if you can qualify to be a member (which with most you can).  Regional ones might depending on various factors, but sticking with banks no bigger than the state you are in is a good place to go.  Almost all of my loans are under $100k and I use a statewide bank where I invest.  Never had any issues.

[Chris Mason]

Originally posted by @Mushfiq S.:

Originally posted by @James Wise:

Originally posted by @Mushfiq S.:

Originally posted by @James Wise:

Originally posted by @Tom Camarda:

Greetings all,

I'm finding some good low cost, cash flowing properties in Ohio. Problem is, my usual lenders will not lend on these because their minimum loan is 100K.  Is there an option out there for conventional loans for buy and hold investors who want properties under 80K?

Thank you,

Tom Camarda

 Tom,

Citizens bank, Wells Fargo & MB Financial will all lend on sub 80k properties. MB will actually loan on sub 30k properties if you were going that route.

 Would these banks charge additional points or other fees in order to cover the cost of underwriting?

Of course, nobody works for free.

 Yes. No on works for free. I was saying in comparison to a loan for say about $200k versus one under $50k. Would they have additional costs that are not present in larger loans?

I do not want to go through the underwriting if the costs are extremely high.

 Origination costs that lenders incur are relatively flat. The underwriter doesn't get paid less for your $75k deal than she does on that $500k deal. And so on. 

As a % of amount financed, that number will shoot up as loan amount decreases. Which, in turn, creates a bunch of compliance hurdles because CFPB QM rules focus on % of loan amount as the metric.

If the advice in this thread hasn't gotten you an answer yet, google search "poorest zip code in Ohio" and find out who is doing those mortgages. If you need to, call the listing agents on some $50k listings, say "hey I was thinking of putting an offer in on your listing at 123 Main St  but my lender says they can't go that low... do you know anyone?" There's your willing expert. 

[Adam Christopher Zaleski]

I bought a primary house in Florida in 2012 with a original loan of 90K from a local credit union. That house is now a rental. I once asked about their commercial loan rates and they weren't very good.

[Jacob Pereira]

@Chris Mason's advice is on point, as per usual. If all else fails, you can always go hard money; I'm currently lending someone $32k (of course I'm much more expensive than conventional financing).

[Jenn A.]

I have had 2 great experiences with Guaranteed Rate, one loan amount was  $48,800. They were quick and responsive and everything was easy and closed right on time. Rate was at going market for IP and fees are required to be under a certain amount anyway to stay in compliance.

[Ian Walsh]

We do loans under 100k but we like the ARV to be at a certain threshold in our markets. Eastern PA, South Jersey, MD, DC and NVa.

[David Krulac]

@Tom Camarda

Credit Unions, small local and regional banks. Just settled one a couple weeks ago, 4.5% fixed for 10 years, 20 year amortization, 75% LTV, less than $100K with Credit Union.

Also have used "Signature Loans" from credit unions many times for down payments and rehab costs; typical $10k to $75K, no collateral, around 8-9%

[Tom Camarda]

Thank you all for the great responses!! This is very helpful! TC

[Brandon Schlichter]

Local credit unions and portfolio lenders, specifically ask for their commercial division.

It isn't easy to find , but there are ones out there. If you're in Central Ohio I could give you some recommendations. But any non-national bank may be a good fit. Some may have you do a line of credit if the house is under $50k though.

[Ryan Ball]

We have sub-$100k loans (via our broker) with Caliber, Huntington and Stearns all in Ohio.

[Tim Spires]

I'm looking to flip houses in the Middle Georgia area now, so I have spoken with 15+ mortgage brokers and banks in the past month. I focused on small local / regional groups. I've found that loan minimums are $50k for most lenders in the Middle Georgia area. Of the 15 brokers I spoke with, only one would loan in a way that supports the BRRRR strategy. And I had to talk to her three different times for ~30 minutes to figure out the answer because she initially said they couldn't support what I was looking for (lending laws and bank policies are complex).

My point is simply that you should expect to spend some time on the phone with the mortgage officers and keep making phone calls until you find what you need. I was looking for something specific, and I didn't stop making calls and asking questions until I found it.

[James Masotti]

Originally posted by @David Krulac:

@Tom Camarda

Credit Unions, small local and regional banks. Just settled one a couple weeks ago, 4.5% fixed for 10 years, 20 year amortization, 75% LTV, less than $100K with Credit Union.

Also have used "Signature Loans" from credit unions many times for down payments and rehab costs; typical $10k to $75K, no collateral, around 8-9%

David - Those are great terms. Just curious if you feel your getting those terms because of the relationship you've developed with the credit union over the years or if that's what they are offering out more generically. 

Trying to get a grasp on how regionalized terms are for the smaller banks and credit unions so that I can take advantage of this if possible. 

[James Masotti]

Originally posted by @Tim Spires:

I'm looking to flip houses in the Middle Georgia area now, so I have spoken with 15+ mortgage brokers and banks in the past month. I focused on small local / regional groups. I've found that loan minimums are $50k for most lenders in the Middle Georgia area. Of the 15 brokers I spoke with, only one would loan in a way that supports the BRRRR strategy. And I had to talk to her three different times for ~30 minutes to figure out the answer because she initially said they couldn't support what I was looking for (lending laws and bank policies are complex).

My point is simply that you should expect to spend some time on the phone with the mortgage officers and keep making phone calls until you find what you need. I was looking for something specific, and I didn't stop making calls and asking questions until I found it.

 I imagine talking to a mortgage broker rather than directly to the lending institution might have something to do with the minimum as well. The broker has to make a fee on top of whatever the bank is charging them. I wouldn't be surprised if it's the broker who is setting the $50k minimum and not the bank, because the broker doesn't want to do all the work of originating the mortgage just so they can get a $100 fee or something like that.