Fannie Mae‘s current policies don’t allow an investor to finance any more than four properties backed by Fannie Mae. Thus, if you own the home you live in, you could only purchase three additional properties as an investment. This has directly affected several of my clients who have had to stand on the sidelines, or seek a commercial loan as they considered recent investment purchases.
THE GOOD NEWS — effective March 1, 2009, an investor will now be able to finance up to 10 properties through Fannie Mae!
Fannie Mae does, however, put some rather significant limitations on this new policy. This summary is my interpretation of the new policy, but I encourage you to talk to read the policy yourself as well:
- The highest loan-to-value ratio will be 70%.
- The borrower must have a minimum credit score of 720.
- No bankruptcy/foreclosure during the past 7 years.
- No mortgage delinquencies (30+ days) in the past 12 months.
- Rental income on proposed and current properties must be documented.
- Reserves must be shown for the proposed and current properties.
Again, these changes won’t go into effect until March 1, 2009, but if you meet the criteria listed above, you’ll soon have significantly greater financing options on investment purchases. This is great news for the investors who have keyed in on good opportunities in our market but who have been called back to the sidelines due to this financing restriction.