An investment property mortgage is designed for borrowers purchasing or refinancing real estate that is owned primarily for investment purposes, such as generating rental income or building a real estate portfolio.
GuardHill Financial offers a variety of investment property mortgage options for both new and experienced real estate investors.
What Is an Investment Property Mortgage?
An investment property mortgage is a loan used to purchase or refinance a property that is owned primarily for investment purposes rather than for the borrower’s personal use.
Investment properties may include single-family homes, condominiums, co-ops, townhouses, and 2–4 family properties that are purchased or held as income-producing real estate.
How Is Investment Property Financing Different?
Because investment properties are financed differently from primary residences and second homes, they are generally subject to different underwriting guidelines.
While requirements vary by program, investment property borrowers may encounter:
- Lower Loan-to-Value (LTV) Ratios: A larger down payment or greater amount of equity may be required.
- Higher Reserve Requirements: Borrowers may need to demonstrate sufficient assets to cover a certain number of months of mortgage payments after closing.
- Stricter Credit Requirements: FICO requirements may vary based on the property, LTV, and loan program.
- Rental Income Guidelines: Eligible existing or projected rental income may be considered when qualifying.
- Different Rates and Pricing: Investment properties may have different rates and pricing than comparable owner-occupied properties.
The exact requirements depend on the borrower, property, loan amount, and mortgage program.
Flexible Ways to Qualify
GuardHill offers multiple ways to qualify for investment property financing.
Traditional Income Qualification
Borrowers may qualify using traditional sources of income, including employment income, self-employment income, and eligible rental income.
DSCR Loans
Real estate investors may also be able to qualify based primarily on the cash flow of the investment property rather than their personal income.
With a Debt Service Coverage Ratio (DSCR) loan, the property’s rental income is compared to its applicable housing expenses to determine qualification. Depending on the program, this may allow investors to qualify without providing traditional income documentation or tax returns.
LLCs and Other Vesting Structures
Investment properties are commonly purchased and held in LLCs and other entities, particularly by borrowers who own multiple properties or are building a real estate portfolio.
GuardHill has extensive experience financing investment properties with LLCs and other vesting structures. Our mortgage professionals understand the additional documentation and lending requirements that can come with entity ownership and can help identify programs that accommodate the borrower’s desired ownership structure.
Because eligibility varies by loan program, our team can review the proposed ownership structure early in the process to help determine the available financing options.
Investment Property Financing Options
Depending on the loan program and borrower qualifications, financing may be available for:
- Single-family investment properties
- Condominiums
- Co-ops
- Townhouses
- 2–4 family properties
- Purchase transactions
- Rate-and-term refinances
- Cash-out refinances
Why Work With GuardHill for an Investment Property Loan?
Investment property financing is not one-size-fits-all. Guidelines can vary significantly depending on the borrower, property, number of properties owned, method used to qualify, and ownership structure.
With more than three decades of mortgage financing experience, GuardHill offers access to a wide range of investment property mortgage programs and specializes in working with real estate investors whose financing needs may extend beyond traditional mortgage guidelines.
Whether you’re qualifying through traditional income or DSCR, purchasing in an LLC or another vesting structure, acquiring your first investment property, or expanding an existing portfolio, our mortgage professionals can help structure a financing solution around your needs.
Frequently Asked Questions About Investment Property Loans
What is considered an investment property?
An investment property is real estate owned primarily for investment purposes, such as generating rental income or building long-term value, rather than for the borrower’s personal use.
Do investment properties require a larger down payment?
They can. Investment property mortgages may have lower maximum LTV ratios than primary residence or second-home financing, which can result in a larger down payment requirement. Requirements vary by program.
Can rental income help me qualify?
Yes. Depending on the loan program, eligible existing or projected rental income may be considered when determining qualifying income.
What is a DSCR loan?
A DSCR loan allows an investor to qualify primarily based on the rental income and cash flow of the investment property rather than traditional personal income.
Do I need tax returns for a DSCR loan?
Not necessarily. Certain DSCR programs may not require traditional personal income documentation or tax returns because qualification is primarily based on the property’s cash flow.
Can I purchase an investment property in an LLC?
Yes. Many real estate investors choose to purchase and hold investment properties in an LLC or other entity. Certain mortgage programs allow properties to be financed and vested in an LLC, subject to program requirements.
GuardHill has extensive experience with LLCs and other vesting structures and can help determine which financing options accommodate your proposed ownership structure.
Can I finance an investment property if I already own multiple properties?
Yes. Financing may be available to borrowers who already own multiple investment properties. Requirements vary depending on the borrower’s portfolio and the specific loan program.
Can I refinance an investment property?
Yes. Investment property financing may be available for both rate-and-term and cash-out refinances, subject to borrower, property, and program requirements.
Can I take cash out of an investment property?
Yes. Qualified borrowers may be able to access equity through a cash-out refinance. The amount available will depend on the property’s value, existing mortgage balance, LTV, and applicable program guidelines.
Explore Your Investment Property Financing Options
Whether you’re purchasing a new investment property, refinancing an existing property, or expanding your real estate portfolio, GuardHill can help you evaluate your financing options.
Our mortgage professionals can help determine the appropriate qualification method, loan program, and vesting structure for your specific transaction.
Contact GuardHill Financial today to discuss your investment property financing options.
All loans are subject to credit and property approval. Program availability, rates, terms, documentation requirements, loan-to-value limits, vesting requirements, and eligibility are subject to change and may vary based on borrower and property qualifications.
