Bank will only allow 30% of LLC's funds for closing and down payment costs

[Kelly N.]

Hi all,

Anyone heard of this policy?  I am trying to find out if it is just Quicken Loans or if this is a Fannie/Freddie stipulation.

We are in the process of buying a 3rd rental property. We bought the first 2 in 2013 so now they are considered assets instead of liabilities in the debt to income calculation. I manage the properties and collect the rent and make mortgage and utility payments out of the business account, which happens to be an LLC with me as the only member and me as the only signer on the bank accounts. About 40% of the money I need for the down payment and closing costs for the next purchase is to come from the LLC account. The rest is in our personal bank accounts and in a joint investment account. Quicken Loans informed me that they can only accept 20% of the LLC assets for down payment and closing costs! I argued with them and sent them the paper work showing me as the only one with access to the money, and they are now allowing 30%.

I am wondering if this is a standard policy or unique to Quicken Loans? I am going to ask another lender tomorrow but if this is standard practice I wanted my fellow BP investors to be aware of it- instead of watching an LLC bank account grow from nothing to a large portion of your deposit you need to be transferring these assets back to yourself regularly.

I forgot to add, we are allowed to use 30% of the account that holds our security deposits and is labelled as such, even though this money is not mine but my tenants'!

Kelly