Thinking About Buying Rental Property And Need A Rental Property Loan?

Because this web site is dedicated to home loans I am not going to get into all of the things you must consider about being a landlord. I am only going to talk about what you need to know about a rental property loan.

Buying investment property is an excellent idea. Not only do you receive appreciation and tax benefits (consult your tax advisor) from owning a rental but you have someone else paying for it. Here is another little tid bit. More millionaires have been created from real estate than from any other investment.

The types of rental property loans available are outstanding. In fact there are several zero down rental property loans available. There are even loans available if you can’t prove your income, assets, or your self employed.

Here are a few things to keep in mind when looking for a rental property loan:

To get the best interest rates plan on having a 20% down payment.

A rental property loan will have an interest rate at least.5% to 1.5%  higher than the lowest rate you could get if you were buying an owner occupied home.

As long as you qualify for the loan it does not matter if the rental has any cash flow.

 Typically you will need good credit to qualify for a rental property loan.

You must put at least 20% down and you will have a better interest rate if you put 25% down.

There are many options available including fixed rate mortgages, and adjustable rate mortgages.

If you are planning on buying more than a 4 unit rental it will become a commercial loan.

If you have never owned rental property some lenders will not allow the future rents to be included in your debt to income ratio as income.

Mortgage reserves may be required. Meaning you have 2, 3, or 6 months worth of Principal, Interest, Taxes, and Insurance (PITI) accessible.

With all of the options for rental property loans available I am surprised more people do not take advantage of them then there are. With interest rates still extremely low I would highly recommend that you get on board and get approved ASAP.