Mortgaging a home for 75% loan to value question

[Chris Allard]

I'm sure this question has been asked a million times on this site, but I could not find it through the all the posts on BP. I have bought a home for all cash under Market Value through my corporation (lets say 170K), and it appraised for 225K.  I would like to get a 75% loan to value on the property to get my money back out.  Does anyone know what today's rates would look like on a 30 year amortization loan?  Or what leading terms you would typically get from a bank if you have the property to leverage?

Oh, the company is new and only has that 1 property as an asset.  Thanks in advance for your feedback BP community!

[Andrew Postell]

@Chris Allard no problem.  This is a very common topic and discussing it here will help the next person!  There are some very specific rules to what you asked it the 6 month mark is very important.

If you purchase a home with cash or a HELOC and you are seeking to receive a cash out loan in the first 6 months of ownership you can absolutely get cash back but you will be limited to either...

1.  Your initial purchase price + closing costs when you purchased the home...OR..
2. 75% of the Appraised value......whichever is LOWER.

In your example above you will be limited to receiving $168,750.  Now the rule I showed above doesn't really affect what you are doing since even after the 6 months mark you are still limited to the 75% threshold.  But for some people the first part of that rule may affect some purchasers.  

The rules I stated above apply to Single Family, Investment Properties, and with conventional loans.  Conventional loans are the loans governed by Fannie Mae and Freddie Mac (if you recognize those names).  Where it gets confusing is that some lenders will place extra rules on top of the Fannie/Freddie rules.  Some banks might say "we need you to be on title 12 months" or "we limit you to 70% cash out" and some banks don't allow cash out loans on investment properties at all.  These are all overlays.  The above items are the actual conventional rules.  If you go to a bank that doesn't follow the above rules then go to a different bank.  As investors we try to find banks with no overlays...or as few as possible.

There is a 2nd possibility as well - Portfolio Loans. Portfolio loans are loans that are not governed by Fannie/Freddie so it might be possible to find a portfolio loan that lends 80% LTV on a cash out loan. However, the rate might be 2% higher...or an adjustable rate...or even a 15 year loan which makes your payment higher....and I've even see all three on a loan before.

I hope this hasn't been too long of a post but if you have more questions feel free to ask away.  Thanks!