No loan under 100k because of safe harbor guidelines? Need advice

[Andres M.]

I called a conventional lender to get pre-approved for a loan for an investment property (in OH).  The asking price for the property I had in mind was $70k with a 25% down payment of $17,500 which means the loan amount would be $52,500.  The lender mentioned that there are federal "safe harbor guidelines" where the lender fees cannot exceed 5% of the loan amount "to protect the customer".  Because of the low loan amount, in this case the lender fees would be higher than the 5% and therefore, they wouldn't be able to offer a conventional loan.  The lender also said that the loan amount would have to be at least $100k in order for the lender fees to be under the required 5%.

I've never heard of these safe harbor requirements so I was taken a little by surprise.  I would be able to buy a property under $100k, all cash but this forum has taught me to leverage the bank's money and use as little of your own money so that's what I was trying to do.

I'm looking for advice on what would you recommend in this case?  If you've been in a similar scenario, what did you do?

Thank you in advance.

[Jay Hinrichs]

@Dan Schwartz  I see a lot of huds in my work a day world... how lenders make up for safe harbor is junk fee's which they are not limited to.. most loans of this size will cost 4 to 5k to get funded... includes origination fee's and all the junk fees.

I have not seen one under 3,600.00 total fees on the hud.. paid by buyer ... a lender simply cannot stay in business if they are not making 4 to 5k per file... they would close up shop and stop doing those loans if they could not generate that amount of revenue per file.