Financing for Resi Mortgages under a Multi-member LLC

[Account Closed]

Hi, I'm looking to purchase a single family home with a partner and am trying to wrap my head around how to structure the financing on equal footing while purchasing through an LLC. My understanding is that by buying through an LLC, that one of us will need to personally guarantee the loan.

Is there an effective way to even the risk between us and keep the partnership on equal footing without one person having to assume all the guarantor risk? Can we both guarantee an individual mortgage since we will be equal partners in the business? Is the difficulty around receiving financing under an LLC minimized once a track record has been established within the partnership? Am I just off base about the best way to go about this?

This set up seems like it would be far too common to not allow for relatively easy financing. Any advice/guidance is much appreciated!

[Dennis Muno]

Hello Zach,

So for the financing options I believe it is impossible for both you and your partner to be guarantors. This should be lender dependent but I don't see why you won't get lenders who do that. In fact, with two guarantors, the risk is reduced and your rate could be lower because of that(lending and loan pricing available is based on risk).

Both you and your partner, should be able to guarantee the loan and apply for the loan jointly. 

Regarding receiving funding under an LLC and difficulties: Banks/lenders will usually ask for your articles of incorporation, check credit, depending on loan type, will ask for reserves, require some insurance just to make sure your risk is acceptable for them to loan to you. If you have these things, you should find some lenders who will lend to you.

I will also recommend that when you want financing, you should call multiple lenders and shop their loan pricing before you settle on a lender and loan product. Better yet, you can engage a local mortgage broker and have them shop multiple banks/lenders and provide you with options for you to decide.

Best of luck to you!