Conventional vs Commercial Loans

[Grant Lovelady]

Hey everyone,

My name is Grant and I am a new investor in the Houston, TX area. I have been on BP for several years but have finally gotten to a place financially that I am ready to invest in my first deal.

My question is about conventional vs commercial loans. I recently got approved by a local credit union for a commercial loan. This credit union will lend up to 80% of the lesser between sales price and appraisal and at most be amortized over 25 years with 5 year balloons at 5.75% interest currently. The main benefit of this particular credit union is they will lend the 80% of whatever is on the county's website for the property value sight-unseen (in their particular county). In my opinion, the last part seems pretty valuable for any deal I get for less than what is on the county website.

For a newbie looking at SFR to start, does this sound about right as far as lending terms? Should I shop other lenders and is there a way to get a fixed conventional loan on a house I do not plan living in?

These questions might have been answered already so anyone that can point me in the right direction would be a big help. Thank you!

[Jared Bouzek]

Grant Lovelady You can get a Conventional mortgage for an investment property that you will not occupy. The nice thing about sticking to Conventional is you can get a 30 year fixed and get a better rates than commercial. You can go to 85% LTV on single family and 75% LTV on multifamily up to four units if you won't be occupying as your residence. Most people stick to Conventional for the better financing terms up until they max out their ten loans and then switch to commercial.