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One of the most important part of the average real estate purchase is normally the mortgage financing necessary to obtain the property.

The average home buyer does not have the assets to purchase property without some type of mortgage financing. Even those home buyers who can afford to pay for the entire property with cash, it is sometimes not a good idea to use mortgage loans for tax and investment purposes.

Mortgage programs typically set limits on the loan amounts available for purchases. These loan-to-value (LTV) limits are based on the property's value, type and program.

For example, conforming programs--which normally have the best rates and terms--impose the following LTV limits on purchase loans:

  • Single-family home or condominium unit, owner-occupied: 97%
  • Two-unit residential property, owner-occupied: 90%
  • Three-unit residential property, owner-occupied: 80%
  • Four-unit residential property, owner-occupied: 80%
  • Single-family, 2nd homes: 90%
  • Single-family and two-unit residential, investment (NOO): 80%
  • Three-unit & four-unit residential, investment (NOO): 75%

However, home buyers and real estate investors can actually find higher LTVs with non-conforming programs. For a detailed discussion of the many no down payment tactics available, see our No Down Payment Programs article.

The buyer can also reduce or avoid paying for hundreds of dollars in closing costs through smart strategy. For more information, see the No Closing Cost Options article.

Note that regardless of the buyer's credit, income and asset situation, all prospective buyers have several options. For a discussion of these alternatives, see the Creative Financing section.

Again, for more information about purchases, please see the "Homebuyer Guide," "Mortgage Deed and Promissory Note" and "Closings and Transactions" articles.

We hope that you've found our Mortgage and Real Estate Resource helpful and informative. We welcome all comments, critiques and suggestions; please send emails to [email protected]. Remember that whether your are buying a home or an office building, you are investing in real estate. As with all investments, the best investors are those who can gather the most knowledge, tools and resources. Regardless of whether you use our lending services, please spread the word about our resource center to anyone you know who may benefit from our site.

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Real Estate Planning And Prosperity

Real Estate Planning And Prosperity

Entrepreneurs go against the flow. You've a business idea. Lots of individuals have business themes. The difference is that you, the entrepreneur, take action. Realty investors are the same.

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