Can a loan from a family member be turned into a secured loan?

[Ryan Moore]

Is there a way to turn a non-secured loan from a family member into a secured loan that a mortgage lender would allowed to be used towards downpayment on a rental?

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Originally posted by @Ryan Moore:

Is there a way to turn a non-secured loan from a family member into a secured loan that a mortgage lender would allowed to be used towards downpayment on a rental?

 I think I understand what you are asking but maybe I don't. I'll give it a try.

You can turn a non-secured loan into a secured loan by creating a note and deed of trust that is filed against a property. However, when you buy a property a lender wants you to have skin in the game (usually 20% cash, on an investment property but some lenders will go with a lesser amount). The lender typically will run a credit report to see what liabilities you have (open accounts) and from that they calculate your debt to income ratios (front end ratio and back end ratio). If the newly secured loan is sufficiently high, it could throw your ratios off and prevent you from getting the loan based on your income. That is, they may determine you don't have enough income to service all of your debts. This part varies by lender, so shop around.

I am assuming you would be using the cash you get from the now secured loan to apply toward the transaction. 

The lender may want to see some "seasoning" 6 months of payments "on time" to the newly secured loan before they will accept it as a serious loan. Again, this varies so shop around. 

Mortgage brokers are the best source for exploring various lending options. Banks are limited in their offerings.