Investor's Loan Guide by Graham W. Parham

Good News is October 26, 2015, Freddie Mac issued changes which
positively affected real estate investors. Freddie Mac increased their number
of allowed financed properties from 4 to 6 when financing an investment
property or second home. Also, Fannie Mae followed Freddie’s move in
September 25, 2016, and increased the tolerance for risk to allow investors to
purchase up to 6 loans on SFR’s at 20% down. With these new changes,
investors now can put 20% down on an SFR up to 10 loans. In addition, they
can also do cash out loans on 10 properties without any timing constraints.
Another great advantage is borrowers with less than 720 FICO scores can also
do an additional two loans as long as Fannie Mae’s and Freddie Mac’s
underwriting engine approves the loan.
The next major change with Freddie Mac was the removal of the twoyear
landlord history experience requirement which affected the utilization of
rental income. Now that this has been removed, borrowers will be able to utilize
75% of the gross rental income with a lease agreement or 75% of the average
market rent analysis provided on the Fannie Mae appraisal report.
If my wife is not on the loan, does it count against her as far as the
number of real estate properties owned?
Yes and no. For years the Fannie Mae’s cutoff point for the number of
properties with loans you can own has been 10. Because of that, a husbandand-wife
would make use of their maximum leverage by splitting up the
acquisitions equally. The husband would buy 10 and the wife would by 10. In a
perfect world this seems realistic, but let me caution you on how lenders
interpret the count these days. Before the meltdown, the lenders would look
at the number of loans against the borrower and make a determination. Today
underwriters take into account the true ownership of the property, regardless
of whose name is on the loan. As explained above, the wife does not have to
go on the loan, but they can go into title showing equal ownership. Today
lenders look at that as ownership regardless of the number of loans against
each other. Example: if the husband has six loans in his name and the wife has
five loans in her name, and the lender determines that all 10 properties are
titled in both names, the couple will not be eligible for any future Fannie Mae
loans.
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