A borrower is refinancing a duplex they own as an investment property. The current loan balance is $485,000, and they want to cash out $75,000. The property is in an area with a $650,000 conforming limit. What additional GSE restriction applies?
Correct Answer
B) The maximum LTV is typically lower for investment properties
GSE guidelines typically impose lower maximum LTV ratios for investment properties (usually 70-75%) compared to owner-occupied properties (80%), making qualification more restrictive even within conforming limits.
Why This Is the Correct Answer
GSE guidelines typically impose lower maximum LTV ratios for investment properties (usually 70-75%) compared to owner-occupied properties (80%), making qualification more restrictive even within conforming limits.
More Mortgage Knowledge Questions
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A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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