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Going up to and beyond the 10 mortgage Fannie Mae limit

By
Real Estate Agent with The Virtual Real Estate Team 104556

For investors the 10 mortgage Fannie Mae limit can be a problem. It starts with your first 4 properties that include a primary dwelling, a second home, and two investment properties, that is 20% and straight forward. Then from 5 to 10 it goes to minimum 25% down and larger reserve requirements. Here is a possible suggestion to first maximize your rental units in Oklahoma City as you approach 10 mortgages. If you buy a duplex to quadriplex on one mortgage it only counts as one mortgage not 2 to 4 units. This allows you to increase the number of rental units you can have. We found an interesting variation in putting two duplexes on one lot to create one mortgage and four rentals. Think about this as you reach the limit. After ten you can go to what is called a non-conforming conventional mortgage in unlimited amounts. However these have some requirements and rates to think about. Right now almost of of them are limited as a fixed rate from 5 to 10 years and the higher the fixed term, the higher the rate. They are 30 year mortgages but go adjustable after the fixed period. The interest rates are also higher usually starting close to 6% and going up. Of course if your Oklahoma City investment property yields enough cash flow then it can be fine, and we are seeing credit loosening up so within say a 7 year fixed period the possible refinance into better terms is always possible but not guaranteed. We want to help you make these decisions and we want to make sure you understand all the ramifications. The multi-family property strategy as you move toward 10 mortgages is becoming popular. The after 10 is something new and catching on slowly but gaining momentum. The farther away we get from 2008 and as our economy keeps improving, lenders will be more aggressive in out of the norm financing but of course as long as you still prove that you have the ability to be financially stable and make the payments in any downturn. For more information about strategies for buying Oklahoma City real estate investments, please contact me at joe@joepryor.com.

Comments (5)

Joan Dickie
Keller Williams Premier Realty - La Crosse, WI
Keller Williams Premier Realty

This is GREAT information for investors in your area.  Thanks for sharing this information with all of us.  Do you find many lots where you can put multiple units?

Jan 29, 2016 06:48 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

Excellent option for the multi-investor. We use our local bank to finance our rental properties and it is faster and a little less hassle. That is one good thing about a small town.

Jan 29, 2016 01:11 PM
Troy Erickson AZ Realtor (602) 295-6807
HomeSmart - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Joe - Lots of great recommendations for those investors dealing in double-digit properties. Multi-unit might be a great way to even secure more rentals.

Jan 29, 2016 02:44 PM
James Dray
Fathom Realty - Bentonville, AR

Good morning Joe.  Lots of data for the buyer to consider.  I have one of those non-conforming clients.  She is still wanting more.

Jan 29, 2016 07:09 PM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Joe Pryor,

Thanks for the information..sounds like an excellent option for the multi-investor! Thanks for sharing.

Jan 29, 2016 09:42 PM