Investment property financing loans sold to Fannie Mae or Freddie Mac require a down payment ranging from 10% to 25% with a investment property financing fee ranging from 1.5 to 3 points. Please understand that these investment property financing fees are imposed by Fannie and Freddie and are not charges from either your lender or your broker. However, the financing fee allows using conventional rates and loan limits for your investment property. They are available as either fixed rate or an ARM financing for investment property. Even with the investment property financing fees, this financing 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, 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 Investment Property Specialty program (actually a growing group of investment property financing programs) allows purchase or refinances with only 5% equity. The investment property financing 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..
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.
I have a Cash Flow Arm investment property loan based on the LIBOR or MTA Index.
I have a page on how to calculate your mortgage ratios.
Read more about Financing investment property loan Closing Costs
In 2008, Short Sales are where most of the action in real estate is. Learn more about Short Sales
I have a page on mortgage documentation requirements.
If the building you are looking at contains 5 or more units, you will need commercial loans.
If your interest is in foreclosures, visit my foreclosure page.
Here are my thoughts on the difficulty of "flipping" investor properties.
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
Learn about closing in an LLC
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