@Justin Turner There are many guidelines that Fannie Mae puts out and those can and do change over time. The thing you need to understand is that banks can add to those guidelines to make it even harder to qualify but they can't take guidelines away UNLESS they are not going through Fannie Mae. This is what investors refer to as "portfolio lenders" and are your smaller, more local banks. They can make their own qualifications within the law. Fannie Mae is not the law, it purchases and guarantees loans via the secondary mortgage market. It makes sense to build relationships with some of these non-Fannie Mae banks early on but you can start wherever it is easiest for you and a Fannie Mae backed bank may be it for you.
Yes, the banks will tell you everything you need to know to work with each of them BUT you need to know what to ask and have an idea of how it works because one bank will not have the same criteria as another. They will say things like "you need to have..." and that implies it is a requirement for the situation when it really may just be a requirement for that particular bank and that particular situation. Start now with the mindset of "how else can this work, is there another way?" and don't be afraid to ask the banker those questions. It will serve you well as you progress.
Things to consider:
1. Credit Score: We are all assuming you have decent credit. The lending criteria are different for investment properties. You must ask the banks. Internet people can only tell you their experiences. Different banks will have different criteria. DO NOT LET ALL THESE BANKS PULL YOUR CREDIT. It will impact your score and make it harder if not impossible to qualify when you are ready. Go to credit.com (1 score) and creditkarma.com (the other 2 scores) to get an idea of your 3 credit scores. Banks will likely score you lower than these sites but use these scores when you talk with the banks. Don't let them tell you they can't give you answers without your social security number. If you give it, they pull your credit and it's another hard inquiry on your report.
2. Reserves: You will likely need 6 months of reserves if you aren't occupying the property. This is usually PITI plus HOA (if applicable). Sometimes this can be in cash, retirement accounts, equity, etc. Again, the banks will tell you what you need based on your situation and their criteria. If the parents' old house is in your name, you have a ton more options than we could get into here.
3. Down Payment: If you have 10-20% down, you have options for non-owner-occupied personal or commercial loans. If you only have 3.5-5% down, you will likely need an owner-occupied loan meaning you have to live there and will be looking for 2-4 unit multi-family.
4. Where to Live: The above answers may dictate you need to live in the property. If this is the case, you may be able to find a lender who will count 75% of the units you don't live in as income toward DTI and qualifying even if you don't have landlord experience. Ask about the FHA 203k loans for a multi-family property that needs work to get funding and help with the rehab.
Investment house #1 is the hardest to make the leap on. Don't make it harder for yourself by thinking you have to plan for 10 years later or understand everything about the mortgage industry before you even buy the 1st property. Get your credit scores, find realtors in your area who are on BP, ask the realtors and other investors in your area for bank referrals, go call some banks and ask a lot of questions. YOU are the customer for them. If they lend to you, they make money off you. Start a list of their criteria and contact info and then go get that 1st property that fits at least one bank's criteria!
