Lender · Western Springs, IL · Member since 2015 · 472 posts · 245 votes
I see a lot of general terms for programs tossed around on here - Private Money, Hard Money, Portfolio Loans, etc. The vast majority without any concrete information. In response, thousands of people on here are wondering around in search of these mystical Hard Money loans that they cannot find.
Many of these overnight solutions, get a huge loan with no income type loans are exactly as they sound, too good to be true. So I wanted to bring up a Conforming product that does exist and could be useful. Freddie has a 5% down product that works for MFH (yes, even three and four units). In fact the rates and PMI are actually better than many normal conforming loans.
You do have to occupy the home. But it sounds like a potentially great way to get started. You also have to take a homebuyer education class and landlord education class prior to the note date.
Most any mortgage banker or broker you know should have access to this program. Hopefully this is a much more realistic solution for many of you out there.
Better way to get started than FHA 3.5% down when it's workable with the income limit and census tract, IMO, and in some places (Solano County being an example near me) the conventional conforming loan limit is actually higher than the FHA loan limit.
And then, for the census tracts and income limit, you've got 90% of Oakland & significant chunks of other big cities like Los Angeles in "no income limit" census tracts. Because it's conforming and no high balance, down payments in markets like these are often non-round numbers like 8.427% just to hit the loan limit exactly to the dollar.
If someone is getting crammed into FHA without at least exploring this option, it probably means that some lender isn't doing their job.
Because it's conventional, that means...
No FHA property standards.
No FHA "self-sufficiency test," which is a flawed test anyways.
Easier to get offers accepted. If the offer doesn't get accepted, nothing else about the home or the financing even matters, so this is huge. Cashflow on a property that you didn't get the offer accepted because it was FHA is in all cases $0.00.
Jeff Dulla not all borrowers qualify. Income restrictions apply in certain census tracts. Some areas have no income limits. You can search here to see if your income meets the requirement.
http://www.freddiemac.com/homepossible/eligibility.html
@Sung Park Yes, it is census tract based in terms of whether or not there is an income limitation. For example in Chicago though, and the suburbs, I have seen no income limitation.
There are limitations to every single program that exists out there. That is nothing new. This program is A LOT more realistic than any hard money, private money structure I have seen to date.
Jeff Dulla I mention the income limits because it's been the disqualifier for me in my search to house hack using low down conventional. It beats out FHA for sure. Going back to Chicago though, those no income limits will expire sometime this year. Those income limits were enacted because cook county was declared a designated disaster area back in 2013 by FEMA. That qualified it as a underserved area by FHFA for three years out. The three year rolling period is over as soon as FHFA releases the new underserved area list for 2017 which Freddie Mac will need to adopt.
@Sung Park No different than almost any of these programs - Fannie sponsored, Freddie sponsored, bond program, etc. The fact it may not stay long doesn't change the fact that right now the program is feasible and advantageous.
true, the homepossible / homeready programs are amazing right now. Especially with the lower interest rates. It definitely helps with that small push for more qualification.
I loved reading this post here. From all I have been reading on the BP forums it seems like Hard Money and Private Lending is the best way to go. So many people do not realize how much money they are putting on the line with those loans. I've seen people that qualify for FHA loans taking HML. Congrats for the post @Jeff Dulla
Better way to get started than FHA 3.5% down when it's workable with the income limit and census tract, IMO, and in some places (Solano County being an example near me) the conventional conforming loan limit is actually higher than the FHA loan limit.
And then, for the census tracts and income limit, you've got 90% of Oakland & significant chunks of other big cities like Los Angeles in "no income limit" census tracts. Because it's conforming and no high balance, down payments in markets like these are often non-round numbers like 8.427% just to hit the loan limit exactly to the dollar.
If someone is getting crammed into FHA without at least exploring this option, it probably means that some lender isn't doing their job.
Because it's conventional, that means...
No FHA property standards.
No FHA "self-sufficiency test," which is a flawed test anyways.
Easier to get offers accepted. If the offer doesn't get accepted, nothing else about the home or the financing even matters, so this is huge. Cashflow on a property that you didn't get the offer accepted because it was FHA is in all cases $0.00.
@Chris Mason Exactly. I am glad you share my enthusiasm. And unlike so many "products" discussed on here, incredibly feasible without features that are detrimental to the borrower.
It follows your typical Fannie/Freddie guides. I know that is a pretty broad thing. Self-employed can mean a lot of different things in terms of income interpretation depending on how much your accountant is trying to hammer down your bottom line. Definitely something that would need to be explored in depth for you up front.
Is this program for first time home buyers only? Or can folks with multiple properties move up to purchase another owner occupied MFH with only 5%? Seems like an excellent way around FHA and the permanent mortgage insurance.
@Albert Mayzeles I would check with @Chris Mason as I see you are out in CA. I know for the situations I have seen in Chicago, it is not a requirement to be a first time home buyer.
Is this program for first time home buyers only? Or can folks with multiple properties move up to purchase another owner occupied MFH with only 5%? Seems like an excellent way around FHA and the permanent mortgage insurance.
Practically, this means you can have sold your previous home last week, but can't own other RE as of closing except as described above.
So for folks that already own a bunch of real estate, not really a model match.
Anyone just getting out, however, folks in their network need to be bringing this to their attention!
Do it Rich Dad Poor Dad style: start with an income-producing asset, and use the income from THAT to help offset the personal mortgage on the SFR McMansion you purchase later on (or, because this is BP, the run-down beat up SFR that's in crappier condition than the crappiest unit they are landlords of... hey we can invent a joke: "How do you know when you're in the home of a BP member?" - "Because they tell you they own 15 units all with new granite countertops + new fridges in the kitchens, but their personal kitchen has 30 year old countertops and a 1960s lime green fridge.").
Thanks Chris! Sounds like a great option for those starting out for sure!! And that's a great joke about BP members. Over improvement will kill ya! Might as well be comfortable with the simple and old things...for now!!
Is this program for first time home buyers only? Or can folks with multiple properties move up to purchase another owner occupied MFH with only 5%? Seems like an excellent way around FHA and the permanent mortgage insurance.
Practically, this means you can have sold your previous home last week, but can't own other RE as of closing except as described above.
So for folks that already own a bunch of real estate, not really a model match.
Anyone just getting out, however, folks in their network need to be bringing this to their attention!
Do it Rich Dad Poor Dad style: start with an income-producing asset, and use the income from THAT to help offset the personal mortgage on the SFR McMansion you purchase later on (or, because this is BP, the run-down beat up SFR that's in crappier condition than the crappiest unit they are landlords of... hey we can invent a joke: "How do you know when you're in the home of a BP member?" - "Because they tell you they own 15 units all with new granite countertops + new fridges in the kitchens, but their personal kitchen has 30 year old countertops and a 1960s lime green fridge.").
Sorry to hi jack.
So My mortgage with my girlfriend is in both our names, but she is the one that always writes the checks for paying the mortgage out of her account!
Does this mean I can qualify and keep myself on my current property?
Like I always send her money with my bank account to help pay for the mortgage, but its never titled as a payment, just use my bank app to send cash to her at the time of the month for the mortgage.
Is this program for first time home buyers only? Or can folks with multiple properties move up to purchase another owner occupied MFH with only 5%? Seems like an excellent way around FHA and the permanent mortgage insurance.
Practically, this means you can have sold your previous home last week, but can't own other RE as of closing except as described above.
So for folks that already own a bunch of real estate, not really a model match.
Anyone just getting out, however, folks in their network need to be bringing this to their attention!
Do it Rich Dad Poor Dad style: start with an income-producing asset, and use the income from THAT to help offset the personal mortgage on the SFR McMansion you purchase later on (or, because this is BP, the run-down beat up SFR that's in crappier condition than the crappiest unit they are landlords of... hey we can invent a joke: "How do you know when you're in the home of a BP member?" - "Because they tell you they own 15 units all with new granite countertops + new fridges in the kitchens, but their personal kitchen has 30 year old countertops and a 1960s lime green fridge.").
Sorry to hi jack.
So My mortgage with my girlfriend is in both our names, but she is the one that always writes the checks for paying the mortgage out of her account!
Does this mean I can qualify and keep myself on my current property?
Like I always send her money with my bank account to help pay for the mortgage, but its never titled as a payment, just use my bank app to send cash to her at the time of the month for the mortgage.
Is this program for first time home buyers only? Or can folks with multiple properties move up to purchase another owner occupied MFH with only 5%? Seems like an excellent way around FHA and the permanent mortgage insurance.
Practically, this means you can have sold your previous home last week, but can't own other RE as of closing except as described above.
So for folks that already own a bunch of real estate, not really a model match.
Anyone just getting out, however, folks in their network need to be bringing this to their attention!
Do it Rich Dad Poor Dad style: start with an income-producing asset, and use the income from THAT to help offset the personal mortgage on the SFR McMansion you purchase later on (or, because this is BP, the run-down beat up SFR that's in crappier condition than the crappiest unit they are landlords of... hey we can invent a joke: "How do you know when you're in the home of a BP member?" - "Because they tell you they own 15 units all with new granite countertops + new fridges in the kitchens, but their personal kitchen has 30 year old countertops and a 1960s lime green fridge.").
Sorry to hi jack.
So My mortgage with my girlfriend is in both our names, but she is the one that always writes the checks for paying the mortgage out of her account!
Does this mean I can qualify and keep myself on my current property?
Like I always send her money with my bank account to help pay for the mortgage, but its never titled as a payment, just use my bank app to send cash to her at the time of the month for the mortgage.