Are loans available for a non-owner occupied home for an investor who has not established credit?

Asked by Terry Foch, Auburn, CA Tue Dec 14, 2010

Prospective buyer would like to buy an investment property in Auburn, CA. He has 25% for the down payment, no debts, good income but never used credit cards, car loans, etc.

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7
Jim Walker, Agent, Carmichael, CA
Tue Dec 14, 2010
Try Devon Bank in Chicago, Illinois. They are used to doing purchase money contracts for people who are forbidden by their religion from having debt, so they are used to that kind of credit profile. Another thought, is credit unions... They will loan to members who have a history of regular savings account deposits. Like a rent bill, or utility: A record of adding a fixed amount to savings every month is a payment history of sorts.
1 vote
Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Wed Dec 15, 2010
Hi Terry,

I think one of the things that becomes clear from the answers below is that you're going to have a very difficult time getting your client "conventional" financing without established credit. I would support that position.

Whenever I have a unique scenario like this I try to obtain a clear understanding with the prospect that while he/she may find something to make the transaction work, it will perhaps be at a premium. Are they OK with that or is it better to take a different approach and address the reasons for the unconventionality?

Good luck,

Rob Spinosa
rspinosa@rpm-mtg.com
0 votes
Teri Andrews…, Agent, Auburn, CA
Tue Dec 14, 2010
I would try a credit union or one of the local Auburn community banks or a family member, another option is a self directed IRA if he has enough funds in an IRA and doesn't need the income from the rental, he should speak to his finanical advisor.
0 votes
Nelvas, , Fremont, CA
Tue Dec 14, 2010
Hi,

Another suggestion is a private lender. Usually with private lenders they are not concerned about the lack of established credit. They look at the equity postion and potential of the home first and then the buyer. However, a private lender does usually require a 40% down payment, cost is steep and interest rates are about 4% to 6% higher (compared to a standard conventional loan).

Otherwise, conventional loans will require established credit history for an investment property.

If you have any further questions, please feel free to email me at nsamiee@diversifiedmg.com.

Warm regards,
Nelva Samiee
0 votes
Zac Bacon, Agent, Granite Bay, CA
Tue Dec 14, 2010
I will message you information for an amazing loan officer. My best suggestion would be to establish alternative credit and get them to send it into the 3 credit bureaus and have them generate a report. Send verifications for utilities, cell phone, insurance, etc. This can occasionally be used to generate a report and use that for the credit scoring. That is probably the best scenario you will get for someone with no credit history. If he pays rent, get a Verification of Rents and send that into the bureaus as well. Good luck!
0 votes
Bosshardt Re…, Agent, Gainesville, FL
Tue Dec 14, 2010
It is incredibly difficult to get non owner occupied financing right now. Perhaps a community bank would be a good option.

The 2nd option is seller financing. With 25 percent down in this buyers market most sellers would take a chance on this buyer. A lot of lenders will do wrap around financing to accommodate a seller financed deal, so more sellers qualify for this then are aware of it.
0 votes
Myra Gouger, Agent, Las Vegas, NV
Tue Dec 14, 2010
My experience tells me he likely is hiding a bankruptcy or has considerably bad credit or a tax lien. People who pay cash for everything usually have a credit card and have bought a car somewhere in their lives on a payment plan.
0 votes
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