One Personal Guarantor in Partnership LLC?

[Jeremy Bohnett]

Hi all,

Just went under contract today on my first property with a business partner as a 50/50 split. A lot to sort out from here.

Trying to figure out if we should go with lending in our personal names or in our LLC that is being established as we speak. I am not looking for pros and cons of owning property in an LLC or not, but rather I have loan questions relative to each scenario.

The challenge is that there is a significant discrepancy in credit scores and my understanding is that lenders pay attention to the lowest credit score when underwriting.

1. If we went conventional outside of LLC, could the partner with the higher credit score be the sole person on the mortgage (or note. Whatever term is correct), but both on title? My understanding is that the one not on the mortgage wouldn't be able to write off the mortgage on their taxes. Any other consequences of not being on the mortgage?

2. If we transferred title from personal names into the LLC we own 50/50 after closing and evaded the infamous DOS clause, would the mortgage stay in one person's name?

3. If we went the portfolio loan within an LLC route, could the person with a higher credit score be the only personal guarantor on the loan? I'm assuming it's similar to conventional lending where having us both as personal guarantors would negatively affect rates due to one having lower credit.

I understand the implications/responsibilities/risk of being the the only one on a mortgage or a personal guarantor, so not as much looking for those warnings in this case.

Thanks for your help!