Investment Property Financing

Mortgages and loans for investment properties – such as a non-owner-occupied mortgage – work a little differently than those for personal homes.

If you have a mortgage for your primary residence, you probably know that most mortgage lenders no longer require a 20% down payment to get a loan. Lenders are more careful with loans for investment properties, however, because the risks of foreclosure and default are higher.

Most fixed-rate mortgages require at least a 15% down payment with a 680 qualifying credit score for a one-unit investment property. Lenders want you to put down 25% with a 620 or higher interest rate on two- to four-unit investment properties.

Why Consider an Investment Property?

Buying an investment property is one way to potentially earn income off of real estate and a tool to build wealth.

Investing in property is a common way to earn money investing, particularly for those looking for consistent cash flow. If you are thinking about investing in property, you may also want to consider the importance of diversifying your portfolio, so you’re not investing all of your money in one place.

If you have the capital to buy an investment property, you might consider adding real estate to your investment portfolio. However, that doesn’t mean real estate investing is right for everybody. As an investor, you may want to take your time to evaluate your situation to determine the best investments based on your money habits.

Pros of Buying an Investment Property

  • Rising property values may enable you to earn a profit.

  • A rental property provides a steady stream of income.

  • You can capitalize on tax deductions and benefits afforded to rental properties.

Cons of Buying an Investment Property

  • You can lose money due to a market downturn.

  • For rentals, you have to manage the property and take care of repairs, or hire a company to handle it for you.

  • Real Estate is an illiquid asset.

Ready to Invest in Real Estate?

If you’re ready to start building wealth through real estate, or have questions on if this is a good route for you to take, contact us and apply now.