Mortgage Loans For Investment Homes And Commercial Properties

This BLOG On Mortgage Loans For Investment Homes And Commercial Properties Was UPDATED On July 10, 2017

There are several types of mortgage loans for investment homes and commercial properties.

  • The investment home purchaser has two types programs of mortgage loans for investment homes. 
  • The first type of investment home mortgage loan is a 20% down payment conventional investment mortgage loan
  • Conventional Loans need to conform to Fannie Mae and/or Freddie Mac Mortgage Guidelines.
  • With a 20% down payment investment home mortgage loan, the mortgage loan borrower cannot use the future rental income when qualifying for the investment home mortgage loan. 
  • Conventional Investment Home Loans require borrowers credit, income, assets, and liabilities.
  • Borrowers of investment mortgages with Fannie/Freddie would have to have qualifying monthly gross income and debt to income ratio of borrowers need to qualify.
  • In order to qualify for the investment home mortgage loan without using the potential rental income with Fannie Mae and/or Freddie Mac, larger down payment is required.  
  • If the housing expenses on the new loan causes the mortgage loan borrower’s debt to income ratio to exceed the mortgage lender’s debt to income ratio guidelines, the mortgage loan borrower needs to consider putting down 25% in order to use 75% of the potential rental income on the new investment property purchase. 
  • Mortgage loans for investment homes have higher mortgage rates than primary owner occupant and second home mortgage loans.

Using Future Rental Income to Qualify

If the investment home buyer puts 25% down payment on his or her purchase, they can use 75% of the rental income.

  • If the investment home is vacant, they can use the 75% of the potential rent determined by the appraiser. 
  • Putting 25% down on an investment home will also reward the investment home mortgage loan borrower with much better mortgage rates. 
  • There is pricing adjustments on mortgage rates between putting 20% down and 25% down on an investment home.

Alternative Investment Home Loans

There are no doc investment property loans and hard money loans for real estate investors. Hard Money Loans is a great source for seasoned real estate investors, real estate developers, and property flippers to utilize for short term financing.

  • Hard Money Lenders normally require 20% to 50% down payment .
  • Interest rates can be anywhere between 7% to 15%.
  • However, income, tax returns, and debt to income ratios do not factor in when qualifying for hard money loan
  • Hard Money lenders are more concerned with the equity in the property than the actual borrower or borrower’s credit or income. 
  • Sometimes investment home buyers with perfect credit use hard money lenders to get financing because many times the property is not bankable due to borrower not qualifying. 
  • What happens is that the investment property investor pays the higher interest rates to do the acquisition of the property, will rehab it, and then sell it?
  • Situations above will be ideal for real estate investors to close with short term hard money rehab loan.
  • After rehab is done, pay off the hard money lender by selling property or finance it with an end lender at much lower interest and keep the property as an income producing rental property.
  • Hard money lenders are short term investment property lenders. 
  • Capital Network Group Inc., a reputable Hard Money Lender is the hard money and commercial lender of choice for most real estate investors, real estate developers, and consumers. 
  • Hard Money Capital Group, which is headed by President Darren Herringshaw and Executive Vice President Greg Kewin. 
  • The Gustan Cho Team are experts on FHA 203k Loans, is a full service residential and commercial lender where they help their hard money loan borrowers find an exit strategy. 

The Gustan Cho Team are experts in mortgage loans for investment homes and commercial financing.  Real Estate Investors who have any question on mortgage loans for investment homes, please contact us at 262-716-8151 or email us at gcho@gustancho.com.  You can subscribe to our newsletter at www.gustancho.com .

Gustan Cho, NMLS ID 873293
The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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