Published January 14, 2012
Prior to 2008, which we could refer to as the “good old days,” it was so much easier to qualify for a multifamily loan. Now don’t get discouraged, apartment loans are being done every day. It’s just that the loan standards for multifamily financing have become more demanding. And the key is that the borrower’s strengths are now as important, if not more important, than the required strengths for the property.
So it’s natural to ask, “What are the strengths a borrower needs to qualify for an apartment loan?” There are a number of apartment lending strengths needed for apartment financing. 1. good credit scores, 2. good liquidity, 3. good net worth, 4. good income, and 5. a lender may require that you have multifamily experience (ownership of a multifamily complex of five or more units) to get an apartment loan.
This blog will cover the credit score requirements for apartment lending.
Good credit scores: For the most part, your credit scores need to be 680 or higher when you average the scores of all three credit bureaus, and you need to make sure you do not have much credit card debt. You also need to have no or very minimal late payments. For an apartment loan, you also need to have no mortgage late payments, no liens or other public judgments. In addition, for apartment financing, you need to have no foreclosures or bankruptcies for the past 10 years.
If you have weaknesses in your credit scores, you can get professional help to coach you on improving them, so you can get the help needed to qualify for multifamily loans.
Stay tuned for part two.
By Bruce Painter, Marketing Director