For those out there looking for a steady income stream, property investment could be an intelligent method. The rental market is remarkably thriving. 

As per research, the median rent for a 1BR apartment in the USA is around $1025. And if you wish to be a property owner aka landlord, you will probably indulge in investment property loan to buy one. 

Here is an all-inclusive information guide covering:

Different Types

From where to get it 

How to qualify 

Different types of Investment Property Loans

There are 4 distinct types:

  • Conventional: This type of loan is not aided or funded by any government entity. Typically, you may need down payments and a credible credit score to qualify for a conventional mortgage. 
  • Government-Aided: Government-aided loans are an excellent option for those who don’t have enough money for making cash down payments. 
  • Portfolio Loans: an entity who loans capital to a borrower by maintaining the debt on their portfolio so as to achieve constant interest income on the loan. Usually, portfolio loans are provided by small banks. 
  • Commercial Loans: business loan specifically intended for commercial purposes. Usually, these loans are short-termed and can be either secured or not by nature.

From where can you get the best possible Investment Property Loans?

By now, we know the market consists of different types of lenders and each lender considers varied parameters as a deciding factor.  

Real-estate science claims that Investment properties represent a greater degree of risk to lenders. A smart move would be to make yourself a desirable attractive buyer before trying to get investment property loans.

  • Credit Score: Each loan program may have different credit score requirements, but there is no way you can get a loan without a lender going through your credit score.
  • Debt to Income Ratio: The least your monthly deficit responsibilities are as a % of your income before taxes, the decisive your application will be. An individual’s personal income and debts (if any) are considered for specific kinds of investment financing programs. 
  • Assets and Reserves: Lenders have a typical mindset that borrowers should have a certain proportion of capital in liquid reserves. The guidelines are subjected to lenders. The Assets and reserves are reflected as a specific number of months’ value of mortgage payments, inclusive of insurance and taxes.

From where to get investment property loans

A few options that can be considered are:

  • Conventional Banks: Majority of the banks offer property financing programs. You can obtain a conventional or govt-backed loans from most leading banks provided you meet qualifying requirements. 
  • Online mortgage lenders: the most common example of this way is EasyLend. Through online mortgage lenders, you can apply online for loans without any need to visit the bank in-person. 
  • Hard Many Lenders: They don’t worry about your credit score; rather analyze the collateral you have for the loan. The interest rates are usually higher when compared to conventional banks and online mortgage lenders. 

Qualifying for an investment financing program

When compared with residential mortgages, qualifying for investment financing programs is a rather tougher job. A few tips that can help you get approved easily:

  • Making Cash down payments is advised
  • Maintain a credible credit score to be an ideal borrower
  • Negotiate owner loans
  • Check out interest rates and guidelines at local banks.