Because the financial markets are constantly evolving I am always researching any changes with Fannie Mae and Freddie Mac; specifically those which might affect 1-4 family investment property financing. Fannie Mae has always been a strong conduit for this type of financing and I have always felt they were somewhat more investor friendly i.e., up to 10 financed properties, ability to utilize rental income on the subject property, and no requirement for 2 year landlord history experience. This being said, effective October 26, 2015 Freddie Mac issued changes which positively affected real estate investors.
Freddie Mac increased their number of allowed financed properties from four to six when financing an investment property or second home. This could impact investors in several ways. With Fannie Mae, and their policy on multiple financed properties, investors are allowed to purchase up to four financed single family homes with 20% down payment. Past four financed properties the down payment increases on single family homes to a 25% down payment for financed properties five through ten. Freddie Mac does not have this division, so an investor would be able to take advantage of the two additional financed properties at a 20% down payment. In addition, cash out for investments properties was capped with Fannie Mae at four financed properties with the exception of Delayed Financing. Now with the increase from Freddie Mac that limit would go to six financed properties.
I am pleased to see these changes coming from Freddie Mas as I feel they were long overdue.