Investment Property Loans
Non-Owner Occupied or Investment Property Loans Explained
Loans that are used to purchase or refinance investment property have more strict qualifying guidelines than loans for home you will live in as you primary residence. the reason for the more stringent qualifying guidelines is there is more risk of default to the loan investor if you are not going to live in the home.
Here are some of the main features on loan for investment property:
Features:
• Must have 20% down
• Carry a higher interest rate than owner occupied loans
• Conventional financing only (no FHA or VA allowed)
Things to keep in mind:
• Mortgage insurance not available so 20% down is the minimum.
• Borrower must have between 2-6 months of mortgage payment in reserves or savings. In order to use rental income from the property being purchased for loan qualifying the clients must have a 2 year landlord history
• Loans not available on purchase prices under $75,000
• Property must meet conventional appraisal requirements
• Seller contribution capped at 2% of purchase price
• Closing cost higher than owner occupied loans due to cost of rates and appraisals
• Much more difficult to finance if clients have over 4 financed properties.
Loans that are used to purchase or refinance investment property have more strict qualifying guidelines than loans for home you will live in as you primary residence. the reason for the more stringent qualifying guidelines is there is more risk of default to the loan investor if you are not going to live in the home.
Here are some of the main features on loan for investment property:
Features:
• Must have 20% down
• Carry a higher interest rate than owner occupied loans
• Conventional financing only (no FHA or VA allowed)
Things to keep in mind:
• Mortgage insurance not available so 20% down is the minimum.
• Borrower must have between 2-6 months of mortgage payment in reserves or savings. In order to use rental income from the property being purchased for loan qualifying the clients must have a 2 year landlord history
• Loans not available on purchase prices under $75,000
• Property must meet conventional appraisal requirements
• Seller contribution capped at 2% of purchase price
• Closing cost higher than owner occupied loans due to cost of rates and appraisals
• Much more difficult to finance if clients have over 4 financed properties.
