Getting an Investment Property Loan | The Investment Property Lending Process
What is an Investment Property?
An investment property is purchased with the intent to generate rental income or a return on investment on the future sale of the property. Thus, an investment property loan is a mortgage on real estate that is considered an investment property.
Investment Property Loan Requirements
Investment property lending is different than getting mortgage financing for a regular purchase. Investment property loan requirements may include:
An investment property loan interest rate may be higher than a rate for a different loan program.
Benefits of Getting Financing for Investment Properties
It is important to weigh the risks and benefits before investing. Investment properties offer several personal and financial benefits. Property owners may choose to rent the property to provide for additional cash flow, take advantage of the tax benefits, and build their investment portfolio.
Finance an Investment Property Based on the Property’s Cash-Flow
GuardHill’s Investor Cash Flow program allows investors to finance an investment property based on 100% of the subject property’s gross rent.
- The borrower must have a history of at least 6-months of owning and managing investment real estate
- The total rental income generated must exceed the monthly debt of the property
- No tax returns required
- Available for purchase, refinance, and cash-out transactions
What are the Different Types of Property Ownership?
There are three types of residential property ownership: primary, secondary and investment.
Primary: A primary residence is a property that you occupy for the majority of the year, is sensibly located near your place of employment and suits the needs of the occupants. You typically need to occupy the residence within 60 days of closing on the loan and have to live at that property for at least one year after closing.
Secondary: A second home or a vacation home is a residential property that is suitable for year-round occupancy, but is only actually occupied for a portion of the year. Typically, for most second home property financing, rental income cannot be used to qualify for the loan.
Investment: An investment property is owned, but not occupied by the borrower. Rental income can be used in an investment property loan qualification.