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By Rick Smith
The author has permitted the reprinting and redistribution of this article.


Real estate investors could play a key role in the recovery of the housing market. Until recently, financing has been a major obstacle for investors to buy real estate. Now that Fannie Mae has relaxed their investor financing rules, market timing and opportunity will merge with money to motivate the sale of more homes.


Help for real estate investment arrived with the news from Fannie Mae that changed the number of financed properties allowed. Previously, the maximum was four financed properties allowed per borrower. The new limit is a maximum of ten financed investment properties. The updated policy applies to individual or joint ownership of single family homes and 2 to 4 unit homes.


While this new source of financing removes a barrier for real estate investment, it does come with some conservative qualifying guidelines. Fannie Mae is primarily looking for experienced real estate investors with high quality credit.


Highlights of investor requirements include the following

  • A 25% minimum down payment is needed to buy a single family home.
  • Buying a two to four unit property requires a minimum down payment of 30%.
  • A real estate investor must have a minimum credit score of 720 in order to qualify
  • The investor cannot have any mortgage delinquencies within the last 12 months.
  • There cannot be any history of bankruptcy or foreclosure within the last seven years.
  • Rental income documentation with two years of tax returns showing all rental property.
  • 6 months reserves of principle, interest, taxes, insurance is needed for each property.
  • A limited cash out refinance is available with a maximum of 70% loan to value.


The change in policy creates a positive move for the economy, although, stringent rules will narrow the field of qualified real estate investors, and leave many potential investors on the sideline. However, this situation could also lead to a growth opportunity of real estate investment partnerships, groups, and clubs, which are designed to pool financing and credit resources to leverage the buying power of combined individual investors.
Written by Rick Smith (mortgage loans – and information on new homes in San Diego –


If you would like to take advantage of the market and learn how to invest in real estate and you are local to the Dallas Fort Worth area, I know a really great teacher and mentor here in Arlington Texas. Please take a look at his web site:, Dennis has a great Mentoring and training program, I know because I am one of his former students. I learned a lot from his one on one teaching technique. – Michael Harman 817-457-7572

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