Best Mortgage Lender for Investment Property

By | June 24, 2022

The real estate market is always a great choice for investment. But to do it right, the Upkeep Media team suggests having a rock-solid plan. Today, there are many financing options for individuals who want to venture into the real estate market.

Here are some mortgage options for people who are interested in real estate investing:

1. Federal Housing Administration (FHA) loans

The FHA mortgage loan is secured by the Federal Housing Administration and is very popular for first-time homebuyers. With an FHA loan, you can buy a multifamily unit. This is often a strategy used by homeowners, where they live in one unit and rent out the other units. Before the FHA loan is approved, you must have the property appraised by an FHA-approved professional.

2. Investment Property Loans

Another option is to get an investment property loan. These loans are typically offered by national banks, private mortgage providers, and investor-only lenders.

However, you will need to have a large down payment amount and an excellent credit rating. Unfortunately, an investment property loan is not always easy to obtain. It can also be expensive in the long run as the interest rates tend to be higher.

The requirements for an investment property loan are also more stringent and exhaustive, although it also depends on the lender. You will have to provide tax returns, pay stubs, and documentation to prove your current income.

In addition, you also have to be employed by the same employer for a minimum of two years to show to the lender that you have a stable job. Also, the lender may assess the rental income generated by the property to ensure that it will yield a profit. For those who are retired, are working part-time, or have an unsteady job, an investment property loan is usually not approved.

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3. Hard Money Lenders

These are also referred to as bridge loans, which are sometimes used by investors to finance a real estate property. These loans are usually issued by private companies and not by banks.

Hard money loans can be approved very quickly, your credit rating is not important, and the lender has a great deal of flexibility. However, the downside to these loans is that they come with very high-interest rates, and the lender may use conservative methods to assess your property.

Another disadvantage of this type of loan is that you usually have to repay it within a short amount of time. However, for people looking for a quick loan, hard money loans can be a good option.

4. Home Equity Line of Credit (HELOC)

This is very similar to a credit card. The lender allows you to withdraw money up to a set limit. The credit line is always available, and your monthly payments depend on your loan balance and interest.

The HELOC allows you to withdraw money as often as you want over a certain period, but in most cases, you have to start paying back after 7-10 years. The long term costs of this type of loan are lower.

However, the one major downside is that if you default on the payment, your home is at risk of foreclosure.

5. VA Mortgages

VA home loans can be used to purchase multifamily units, but you must occupy one of the units to qualify for the loan. You can rent the other units out and use the rental income to cover your mortgage payments. However, you will need to undergo additional verification procedures if you go this route. Additionally, you must meet the military eligibility requirements for acquiring a VA loan.

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Now that you know the different mortgage options, you can select the loan that suits your situation the best. For more insight, it is best to speak to a mortgage specialist to find out more information.

Cherry Creek Mortgage Company is not endorsed by, nor acting on behalf of or at the direction of the U.S. Department of Housing and Urban Development, Federal Housing Administration, U.S. Department of Agriculture, Veterans Administration, or the Federal Government.

Best Mortgage Lender for Investment Property


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