Conventional Loans Probably Don't Work For Young Investors

[Jordan Penor]

What I am about to say might not be a surprise to more experienced investors, but being so new to real estate I was very disappointed when my loan request got rejected by my local credit union. I hope some people can learn from my mistakes.

 For a little background, I'm 19 years old living near Seattle, Washington. I decided it was time to leave the nest, buy my own house and house hack by renting out the rooms. I was going to do a very conventional loan, putting down 20%. My credit score was good, at 746, I could afford the 20% down, and by house hacking I could definitely afford the mortgage. I'd been working a full time job for just over a year now... That was my first problem. According to my assigned load officer, Fannie Mae requires at least two years of employment. I had another job before, but combined they only totaled 1 year and 10 months of employment (2 months off)! I was pretty bummed about that, but a second problem arose. My credit score was good, but I only had one line of credit, a single credit card that I had for about 9 months. They require 3 lines of credit. However, if you can get a cosigner then they can waive the 3 lines of credit requirement. So after some emails back and fourth trying to find some kind of loophole, it became clear that I wasn't getting the loan. 

I got my self so hyped up to finally take my first step into the real estate world that I was blind to the possibility of such a seemingly cut and dry loan being rejected. I am currently searching for other financing methods, and I'm sure I'll find one shortly. Other than that, I hope other young investors learn from my experience. Older people don't usually have to deal with being rejected because of lack of employment history or lines of credit. So do your homework on what it takes to get a loan and explore multiple paths to financing.