Investment property loans sold to Fannie Mae or Freddie Mac require a down payment ranging from 10% to 25% with a delivery fee ranging from 1.5 to 3 points. Please understand that these fees are imposed by Fannie and Freddie and are not charges from either your lender or your broker. However, the fee allows using conventional rates and loan limits. These conforming loans are available as either fixed rate or an ARM. Even with the delivery fees, these loans can be a good choice if your goals are to maximize cash flow and you plan to hold the property for a 3 to 5 year period. Ratios are normally 28/36, but with automated underwriting, with excellent credit and some liquid reserves, it is not uncommon to see back ratios in the middle 40s. Rental income is decreased by a 25% vacancy factor but there are underwriting methods which eliminates this issue for experienced investors.
The Investor Loan Specialty program (actually a growing group of investor loan programs) allows purchase or refinances with only 5% equity. The program allows up to 20 properties plus your home. Available up to $1,000,000 and 2-4 unit properties are acceptable. Ratios are generally 34/40 and a No Documentation loans program is available. Available as a fixed or adjustable rate in many reduced down payment scenarios. Most of the loans we are currently doing are set up as interest only rather than as a fully amortizing loan to improve your cash flow. Learn more about the power of an interest only loan.
100% investment property financing is now available with fairly reasonable rates. These programs have been available for a while, but at extremely high rates compared to market rates. We finally have a source of financing that will allow you to acquire property with limited out of pocket costs.
I have an Cash Flow Arm investor loan based on the LIBOR Index. The LIBOR (London Interbank Offered Rate) Index is more stable than the COFI index (Cost of Funds Index). Comparison charts between the COFI, LIBOR and MTA indexes are available. One feature of the program is four repayment options. You can decide to amortize the loan for 30 or 15 years, a minimum amount, or interest only. You can choose every month and have the flexibility to manage cash flow as never before!
I have a page on how to calculate your mortgage ratios.
Read more about Financing an investment property Closing Costs
I have a page on mortgage documentation requirements.
Limited and No Documentation loans are now available for investment properties.
If the building you are looking at contains 5 or more units, you will need commercial loans. We can still help you with your needs.
If your interest is in foreclosures, visit my foreclosure properties page for information and links to other resources.
Here are my thoughts on the difficulty of "flipping" real estate.
For the the greatest flexibility and maximum loan qualifying ratios, you may be interested in the Cash Flow ARM.
New! I have added a page on how to properly compare different investment property that may be helpful to you
As a Certified Mortgage
Planning Specialist, I offer an analysis of
your situation today can make suggestions on how small changes in how
your consumer and mortgage debt is structured today can have a life changing effect in the years
to come. Read more
about this free, no obligation service.
As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your consumer and mortgage debt is structured today can have a life changing effect in the years to come. Read more about this free, no obligation service.
Prequalify for Financing an Investment Property