Possible to get conventional financing for a newly created LLC?

[Chukwudi Motanya]

Hi All,

I'm in the process of purchasing a Single Family House with 2 other partners. The 2 other partners would be putting the majority of the capital down and I would be the general manager. If we created an LLC for the partnership, would it be possible to get financing for the LLC if we all placed a Personal Guarantee on the mortgage and we were considered strong borrowers?

Best,

Chudi

[Bob Okenwa]

Hi @Chukwudi Motanya. Most (if not all) banks will not offer a conventional loan directly to an LLC. You'd need to get a commercial loan for that to happen, and those loans are not quite as favorable since they tend to have higher rates and shorter terms.

You could purchase it in one of your names and do a quit claim deed over to the LLC, but the mortgage would remain in the personal name of whomever originally signed the mortgage paperwork as borrower. Though most say it is unlikely, transferring the title to another entity may trigger the due on sale clause so be aware of that as well.