Qualifying for an investment property loan is different than qualifying for a primary or secondary home mortgage. For many borrowers, more stringent guidelines for eligibility make this process more difficult.

As investment properties come with more risk and a lack of insurance options, a higher credit score, additional documentation of income and assets, as well as a larger down payment (around 20%) are necessary. Prior experience with property management is also required by many lenders.

Other things to keep in mind include:

• Additional expenses: Higher interest rates, bigger down payments and other loan process costs can make financing an investment property rather expensive. It’s also important to be mindful of other expenses you may incur such as homeowners’ association dues, cleaning fees, utility costs and more.
• Type of home: Not all investment properties are eligible for financing. Mortgages for manufactured homes, time-shares, co-ops and bed and breakfasts range from rare to nonexistent.
• Home equity line of credit (HELOC): It’s possible to take out a line of credit on your current home and use the equity to finance your investment property. When using a HELOC, the homeowner’s current residence becomes a security for their new property, so it’s important to consult with a mortgage advisor who can explain and guide you through the process.

Call us today at 800−245−3279 for help with financing your investment property!