My client had great income and great credit, but she couldn’t qualify for investment property with a gift for down payment.
The Scenario:
Sarah, my client, was referred because the deal wasn’t a fit at her bank. Her elderly father wanted to transfer his investment property to her before he went into decline. He was aware of the 5-year lookback rule for Medicaid, so selling/transferring the home now was important for him so he could start the 5-year clock.
The value on this 2-unit was $450,000. He only needed $250,000 to pay off his loan balance.
The normal solution? We’d write the deal with a gift of equity for down payment.
The problems?
GIFTS ARE NOT ALLOWED on investment property for traditional programs.
She didn’t live near the subject property, so primary residence wasn’t an option.
She was a first-time buyer (no primary residence ownership), so many of our NonQM and DSCR programs didn’t work.
She didn’t even pay rent because her employer (church) provided housing.
We were fortunate to place the loan in a NonQM program with an exception. Her credit was great. Her deal was full documentation. Her DTI was only 40% without considering any rental income from the subject property.
We are approved in underwriting and will be closing in a few days.
Why this might matter
Many banks and credit unions are risk-averse when it comes to investment property. If your client needs help buying or refinancing (or HELOC) on investment property, there may be options.
Work with me
Do you have a deal that you think might be approvable but doesn’t fit in the box at your bank or credit union? Reply to this email or call/text me at 616.298.2743 for a same-day answer.
One case study per week showing scenarios we’ve been able to help with