Terms & Conditions

Loan Term

30 Year Fixed

Borrowers

Individual or Entity (Properties located in NY, FL, and GA must close in an entity name)

Guaranty

Full recourse guaranty required from at least one (1) qualifying individual that directly or indirectly has an ownership interest ≥ 20% in the borrowing entity

Minimum Loan Size

$75,000.00

Maximum Loan Size

$2,000,000.00 *Loans > $1,500,000 require a 2nd appraisal

Minimum Property Value

$100,000

Maximum Property Value

N/A

Maximum LTV

●         Purchase – 80%
●         Cash-Out Refinance – 75%
●         Rate/Term aka Limited Cash-Out Refinance – 80%
*Refinance qualifies as a Rate/Term as long as the net cash-out proceeds after all payoffs, prepaids, and closing costs are less than 2% of the loan amount

Minimum DSCR

1.0

DSCR Calculation

Qualifying Gross Rent divided by PITIA + HOA if applicable

Qualifying Gross Rent

Refinance Transactions

●         Leased Units = Lesser of 110% Market Rent and in-place rent
●         Unleased = 90% of Market Rent if owned > 6 months, 100% if owned < 6 months

Purchase Transactions

●         Leased Units = Lesser of 100% Market Rent and in-place rent if applicable
●         Unleased = 100% Market Rent

Fees

Origination Fee – The greater of 1.5% of the loan amount or $3,000
Underwriting and Processing Fees – $1,855 for SFR & Condos, $2,155 for 2-4 Unit Properties

Lease Requirements

Fully executed active 12-month lease agreement signed by all parties

Month-to-Month leases require 9 months of reserves

●         If the lease has expired and does not indicate a MTM term, a fully executed lease is required
●         If the lease expired > 1 year and indicates MTM term, then proof of 2 most recent rent payments are required via cancelled checks or bank statements

Each leased property must be used for residential purposes ONLY and be leased to a single family (per unit if multiple units). All leases must be to unrelated third party leases

Occupancy Requirements

Refinance Transactions

●         Single family properties must be leased at the time of closing
●         For all 2-4 unit properties, there cannot be more than one vacant unit at origination and      any vacancies must provide evidence of a recent lease within the last 2 months
●         Vacant properties are permitted for refinances of properties owned less than 6 months from Acquisition Date to Note Date (Will require verification of rent listing)

Purchase Transactions

●         Vacant properties are permitted

Property Value Seasoning

Requirements for Refinance Transactions

If the property is owned less than 3 months from Acquisition Date to Note Date, the maximum loan amount, LTV, or Unpaid Principal Balance if for Rate/Term will be capped by original purchase price + verified cost of improvements

If the property is owned between 3 months and 6 months from Acquisition Date to Note Date, the maximum loan amount will be capped by original purchase price + verified cost of improvements (If LTC is ≤ 120%, As-is value may be utilized for loan sizing)

If the property is owned between 6 months and 12 months from Acquisition Date to Note Date, the loan amount will be based on As-is appraised value and maximum LTV cannot exceed 140% of total LTC

Eligible Properties

●       SFR/PUD/Townhomes
●       Warrantable Condos
●       2-4 Unit Properties

Common Ineligible Properties

●       Manufactured Homes or Mobile Homes
●       Leasehold properties or Ground Leases
●       Short term, seasonal rentals
●       5+ Multifamily units
●       Properties rented by the room
●       Unique properties
●       Mixed Use properties
●       Acreage > 10 acres
●       Properties not in compliance with local zoning regulations (including as reflected on appraisal or residential evaluation)
●       Condo units < 500 sq. ft.
●       2-4 units < 500 sq. ft. on average for each residential living unit
●       SFR/PUD/Townhomes < 700 sq. ft.
●       Properties with known adverse environmental conditions (other than lead paint, radon, or asbestos in each case which do not present a health hazard, do not require remediation and have been verified contained per EPA guidelines prior to closing)
●       Total or partially condemned property (including threatened or pending eminent domain)
●       Not for profit tenants
●       Transitional housing

Ineligible States

AK, AZ, ID, MN, NV, ND, SD, OR, UT, VT, and WY

Liquidity Reserve Requirements

Total Reserve Requirement = Cash to close (Final HUD) + 6 months PITIA + 1% unpaid principal balance on all mortgages reported on CBR

●       If lease is MTM, 9 months PITIA will be required instead
●       50% Cash-out proceeds may be used to meet liquidity requirement

Eligible Assets

Personal bank, brokerage, retirement account

●       Joint Accounts with non-Guarantors acceptable but will be limited by % ownership
●       Joint accounts owned with Spouses are allowable for 100% funds

Cash Value Life Insurance statement

Business bank or brokerage account in the name of Borrowing entity

●       If in an entity other than Borrowing entity, will be based on % of Guarantor’s ownership

Bank or brokerage account held in a Revocable Living Trust

●       Will require full Trust Agreement detailing beneficiary and access to funds

Insurance Requirements

●         100% of insurable value of improvements or the unpaid principal balance of the mortgage
●         Rent Loss coverage equal to 6 months PITIA payments
●         Policies with coinsurance provisions are ineligible

*Request a free quote from our partners at Obie insurance @ https://www.obieinsurance.com/partner/investor-property-loan

Property Condition/Deferred Maintenance

All properties/units are required to be in lease-ready condition with no renovations or repairs required

Properties must have a property condition rating of C1 to C4 as reflected in the appraisal

Deferred maintenance and repair items identified in 3rd party reports must be cured

●       For Purchase Transactions, cost to cure cannot exceed 3% of the value of the property or $2,500 in repairs. Escrow holdback of 150% of the cost to cover will be withheld from Loan Proceeds and an escrow holdback will be required at closing. Borrower will have up to 30 days from closing to complete the work via a final inspection (1004D) to see that deferred maintenance or repairs have been cured
●       For Refinance Transactions, repairs/deferred maintenance must be completed prior to closing

Qualifying FICO Score

680 minimum middle score between Experian, Equifax, and Transunion

Guarantor Credit Requirements

●       Minimum of 3 Trade Lines (open or closed) must be established
●       Minimum of 2 Active Tradelines (account has an active balance or must be active in the last 60 days from credit report date)
●       Minimum 1 Trade Line (open or closed) with a 24+ month rating
●       Alternative Trade Lines may be used on a case by case and will require +6 months additional PITIA reserves and DSCR > 1.2
●       Authorized user accounts are not eligible Trade Lines
●       Derogatory accounts and collection accounts are not eligible Trade Lines
●       No BKs in the past 2 years

Background Requirements

An applicant with a conviction relating to or arising out of financial theft, financial fraud, and financial misrepresentation, money laundering, forgery or other financially related crime is ineligible

Felony convictions that occurred more than 3 years prior to an application for credit are acceptable. Evidence of court records or a letter of explanation for the conviction must be provided for review

Foreign Nationals/Non-Permanent Resident, and ITIN

Not allowed.  Guarantor must be a US Citizen or Green Card Holder

Changes to this Policy

IPL may update this Policy at any time and from time to time.

Contact Us

If you have any questions about this Policy or would like to learn more, please write to us at;

Investor Property Loan
16300 Ventura Blvd Ste 100,
Encino, CA 91436