Investment Property Loan

Popular Investment Property Types

Why Property Investment?

Investing in a property or multiple properties can have its perks. While most people look at rental investments initially for the passive income, there’s also the appreciation to look forward to in the long-term. In addition to monthly cash flow, there are also many tax benefits such as depreciation and a lower tax-rate for long-term profits.*

*Consult your tax advisor for more information and further eligibility requirements.

Who Is Eligible for an Investment Property Loan?

Are you ready for an investment property? While conventional loans are structured to make the loan experience simple for the borrower, investment loans require strong financial standing and healthy cash reserves. If you meet the qualifications below, there’s a good chance that purchasing an investment property is the right choice for you and your family.

For an investment loan, a down payment is a must. For a single-family home, though it can be as little as a 15% down payment is required, but on a 2 – 4 unit property, it is as low as 25% down. If you’re already in the property management game, you know that rental income can help you qualify, based upon the current rental market value.

Qualifying for an investment loan generally requires:

Good credit – the minimum FICO for investment loans should be in a good or an excellent score range, although depending on the loan type and terms, it may differ for your unique situation.

Cash reserves – at minimum it is best to have six months of cash reserves on hand, in addition to closing costs. However, there are different requirements based on your unique situation – the number of properties, aggregate unpaid balance, etc.

Minimum down payment can be as low as 15%– although typically about 20% is the minimum down payment required to eliminate the need for mortgage insurance

Debt-to-income – DTI, or the percentage of your income paid out to debts should be no more than 50%.

Proof of income – steady income must be shown. For the typical employee, this generally means providing pay stubs and W2s, while self-employed borrowers may also be required to provide two years of tax returns.

What types of investment properties are there?

Almost any home can be an investment property. we investment loans for single-family homes, townhomes, condos, or multi-units (up to 4 units ).

What is the difference between an income-producing and a non-income-producing real estate investment?

Almost any piece of property can be income-producing, if someone chooses to rent or lease it. The most common types of income-producing real estate include offices, retail spaces, industrial buildings, and leased residential homes. Each of these would be considered an investment because they are producing income for the owner. The owner can use the income generated by the tenant to help cover the costs of the property, including any mortgage payment for that property.

Non-income-producing real estate investments include the home you currently live in, or second homes that are not used as rentals. Because rent is not received on these properties, all the equity earned is through capital appreciation or through the paydown of any debt attached to the property. The owner must have sufficient income to cover any obligation associated with that property because there is no tenant to provide an income stream.

Why Choose South Main as Your Investment Property Broker?

Whether you’re a first-time investor or you manage several properties, choosing the right team and lender can greatly improve your loan experience. Our team is equipped to help you each and every step of the way through the investment loan process.

Dedicated to helping you invest in a new property or refinance an existing property, we will continually work to help you find the right home loan for your unique needs. To learn more about our competitive rates on a wide range of investment products and see how South Main can help with your next property, please contact us today.