Historically, real estate investors who wanted to build a portfolio of income-generating properties have been limited when it comes to choices for financing. In the beginning, Fannie Mae put a cap on the number of rental properties an investor could finance through their loans. Then, in 2009, the limit was increased. However, even with a more generous limit, Fannie Mae’s underwriting guidelines remain pretty strict, with high credit scores and substantial down payments required. Fortunately, some mortgage companies are offering niche loan products designed to help investors achieve their goals without as many financing hurdles.

Fannie Mae Rental Property Loan Guidelines

In 2009, Fannie Mae increased the maximum number of financed rental properties allowed from four to 10. Under the new limit, the borrower’s primary residence was included and they had to meet certain criteria. These included…

  • Minimum credit score of 720
  • 25% down payment for 1-unit properties
  • 30% down payment for 2-4 unit properties
  • 30% equity for refinancing a property
  • No bankruptcies or foreclosures within the past 7 years
  • No late mortgage payments within the last 12 months
  • 6 months’ worth of PITI (principal, interest, taxes, insurance) reserves for EACH financed property
  • 2 years tax returns

As you might expect, many borrowers find these guidelines difficult to achieve. However, as real estate investors play a key role in the housing market, Fannie Mae hoped to draw more investment activity into the industry by offering well-qualified, experienced investors a chance.

For investors who are both qualified and experienced, yet may fall short on one or two of the above qualifications, there is another option.

Investor Cash Flow Mortgage

With the Investor Cash Flow Mortgage, investors who need a little more leeway to build their portfolios can find an alternative to Fannie Mae financing. Through this program offered by Luxury Mortgage, there is no limit to the number of financed properties a borrower can have. This is the single biggest difference between the program and its Fannie Mae counterpart.

There are other advantages to the Investor Cash Flow Mortgage, including…

  • Cash flow on the subject property may be used to qualify for the loan
  • No tax returns or employment verification required
  • Borrow up to 80% of the home value (only 20% down required)
  • Credit scores down to 580
  • Loan amounts available up to $3,000,000

Guidelines are subject to change. Contact us today for the most up-to-date information.

With a more lenient credit score requirement and down payment minimum, plus the freedom to have as many financed properties as they want, it’s no wonder more real estate investors are considering this specialized niche loan product. As part of Luxury Mortgage’s Simple Access Home Loan solutions, the goal of the Investor Cash Flow Mortgage is to help more investors (both experienced and new) achieve their goals and build their portfolios.

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