Credit Changes on Investment Properties

Changes for Investment Property Buyers:

Changes for investment property buyers are now in effect. As little as 10 months ago, investors had a wide variety of mortgage options, from sub prime loans with little or no money down, to conventional loans only requiring 10%.

As of today, the sub prime market has just about dried up.  In the conventional world, Fannie Mae and Freddie Mac have increased the down payment requirements to a minimum of 20%. Due to the foreclosure issues that have hit the real-estate market, the mortgage insurance companies have taken a major financial hit.  Due to their financial losses they are unwilling to provide insurances coverage and expose themselves to additional risk.

Investors are required to provide of additional reserves, ranging from 3 – 12 months of mortgage payments.  All funds for investment purchase need to be documented and seasoned for 2 months in the buyer’s name.

Lastly, no longer will investors be allowed to hold up to 10 mortgages.  Fannie Mae and Freddie Mac will now only allow a new investor to hold 4 mortgages.