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Financing
of one to four units is considered residential financing,
five or more units are considered commercial.
In
one to four units the lender looks primarily at
the borrowers personal finances. Your ability to
pay for your personal life, mortgage, car payment,
and credit cards is crucial. If you don’t report
enough income to justify your lifestyle then stated
income loans are available, however the terms are
not quite as attractive. For conventional financing
the down payment required ranges from 10% for owner
occupied properties to 20% down for non-owner occupied
properties. There is also FHA and VA programs available
with provide financing with as little as 3% down.
The average time to process a 1-4 unit loan is 30
days.
In
five or more units the lenders look primarily at
the buildings financial figures. There is a detailed
analysis done where the bank determines the buildings
ability to service the debt. The standard way to
analyze this is to look for the net operating income
to be 120% of the debt service (principal and interest).
While the bank still requires that your personal
finances be adequate, there is additional scrutiny
given to your experience with apartment ownership
and management. The down payment required ranges
from 20% to as high as 30% depending on the finances
of the subject building. A very high-end building
could even require more down payment to fit the
120% rule of thumb. The average time to process
a 5-up unit loan is 60 days.
This
is just a brief explanation of financing. There
are too many other types of loans to explain them
all here. So please contact one of the companies
below to answer your questions in more detail.
The
financing of apartments is a specialized business.
It is best if you deal with lenders who have experience
dealing with units. We at Vanguard are always in
search of new lending sources that can help our
clients get the best rates and the fastest service.
The lenders on this page have proven to us, through
transactional history, to be the most capable in
the industry. While the lenders on this page may
pay for inclusion on this page they also must prove
their ability to get the job done. Please provide
us with feedback regarding your experience with
our preferred lenders.
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For
1-4 Units FHA FINANCING
Mark One Mortgage
Hernan Espejo
(800) 819-7668 x224
Website: www.mark1mortgage.com
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