Will banks loan o 90% LTV?

[Colin Carr]

I'm trying to plan out my next buy, but my savings alone would take me forever to save for a conventional loan down payment. I did some amortization calcs on my current house loan and see that at the rate I am saving and with my equity increasing I could do it in about a year and a half under the assumption that I can get a 90% LTV. I have heard of rumor that some banks may do this. I'm in the Denver area, has anybody heard of 90% LTV's and if so who are they? Thanks!

[John Wanberg]

Colin, the answer to your question depends on a lot of different factors... so you might need to clarify your assumptions. Based on your question, it is not just the LTV of the property you are purchasing, but its intended use, your personal credit, your debt to income ratio, and how your structure the deal.

For instance, if you own your current residence, and are looking to buy a new primary residence (and if your current mortgage + projected 2nd mortgage is less than 45% of your current income), then you can get a conventional mortgage. In some cases, you can get a 95% LTV and pay a mortgage insurance premium. If you buy it as a rental (and still want a conventional mortgage), then it is usually 75% LTV max if you go through a bank.

If you want to blow past all of these and buy a rental - you can put together private investors (who usually don't have hard requirements on an LTV...). The problem with the question that you are asking is that it is not about an actual deal. If you were looking to buy a house for $100k that was actually worth $500k (an absurd deal!), then structure the financing to maximize your own equity. The bank will only loan you $75k... because it is not tethered to the value of the property, but the purchase price. If you bought the property with a hard money lender (which would cost you $2000 and $10k/yr), but found someone who was willing to give you a 100% loan of the purchase price secured with the note of the property... you could hold on to it for 1 year and do a cash out refinance at a 75% LTV. So you could easily pull out $400k of equity to go do more deals!

Could you clarify your assumptions?