While government sponsored loan programs (Fannie Mae and Freddie Mac), tend to be the most affordable, they also have the most restrictions. Buy and hold investors looking to grow their rental portfolios often run into some qualification road bumps for these types of loans. Visio Lending, on the other hand, has loan programs tailored to residential real estate investors. We've done a side by side comparison of our qualifications for cash-out refinances versus Fannie and Freddie:
Minimum Credit Score
Fannie/Freddie: 700, which is only acceptable when you have at least 12 months of liquid cash reserves OR a maximum DTI of 36%
Maximum Number of Mortgaged Rental Properties
Visio: No limit
Minimum Number of Liquid Cash Reserves
Visio: We require 3 months of Principal, Interest, Taxes, Insurance and Association Dues (PITIA)
Maximum Debt-to-Income Ratio (DTI):
Fannie/Freddie: 45%, if you have 12 months of financial reserves
36%, if you have 6 months of financial reserves
Visio Lending: Instead of DTI, we use DSCR, which evaluates property cash flow rather than personal income
Fannie/Freddie: 75% for 1 unit and 70% for 2-4 units, ONLY if your credit score is at least 700
Visio Lending: 70%
Want more guidance on when government financing is a good option for you? Check out our blog post "Should You Conform?" and our Decision Tree. on which financing is best for you. Want more resources for landlords? Visit our Resources Page.
Editor's Note: This post was originally published in December 2018 and has been updated in March 2020 for freshness and accuracy.