Rental property loans sold to Fannie Mae or Freddie Mac require a down payment ranging from 10% to 25% with a rental property financing fee ranging from 1.5 to 3 points. Please understand that these rental property financing fees are imposed by Fannie and Freddie and are not charges from either your lender or your broker. However, the rental property financing fee allows using conventional rates and loan limits. These conforming loans are available as either fixed rate or an ARM. Even with the rental property financing fees, these loans can be a good choice if your goals are to maximize rental property 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 property 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 No Documentation loans are available. Available as a fixed or adjustable rate in many reduced down payment scenarios..
100% financing for rental property 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.
Read more about Financing rental property loan Closing Costs
Limited and No Documentation loans are now available.
If your interest is in foreclosures as a real estate investment, visit my foreclosure properties page for information and links to property resources.
For the the greatest flexibility and maximum loan qualifying ratios, you may be interested in the Cash Flow ARM for rental property. This may be the very best option for an investor.
New! I have added a page on how to properly compare different rental property that may be helpful to you
If the building you are looking at contains 5 or more units, you need commercial loans.
Here are my thoughts on the difficulty of "flipping" real estate.
I have a page on mortgage documentation requirements.
I have a page on how to calculate your mortgage ratios.
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 your Financing rental property Loan.