Lending confusion Please Help

[Kristen Ray]

Hello Bp!

Can someone please help me to understand the lending process.

Can investors use a gift from a family member for a down payment?

In what circumstances will a bank lend to a LLC? I have had lenders state that they will lend to the LLC with the owner personal guarantee/backing. While other lenders will not entertain lending to the LLC.

Can an unsecured line of credit be used for a down payment?

Any feedback is helpful. Thanks in advance.

[Chris Mason]

Originally posted by @Russell Brazil:

In the broadest sense there are 2 basic forms of lending.

Commercial Lending - Requirements here as to gifts, and LLC's are very liberal. However you will typically have higher down payment requirements, adjustable rate loans, and a higher interest rate.

Conventional Financing - This is financing where the loans are sold to Fannie Mae/Freddie Mac. These loans typically are made to individuals, have lower down payments (As low as 3% owner occupied, 15% investor), better interest rates.  Gifts are acceptable for owner occupant loans, but I dont think that is the case for an investment property loan. Is that right @Chris Mason?

 Correct, no down payment gifts for investment properties unless you add the donor as a borrower (in which case they are no longer a down payment gift donor, they are a fellow borrower/investor just like you are).