Are you interested in purchasing a home or property in order to rent it or sell it for a profit? You may want to consider financing your purchase with an investment property loan. If you are looking to invest in or renovate a property in the areas of Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, contact Foundation Mortgage today. Our loan specialists can help you find the best deals to finance your investment property.
How Does An Investment Property Loan Work?
Investment property loans, also known as investor loans, help a buyer purchase an investment property to rent out or fix and flip a home for the purpose of obtaining additional income. Typically, an investment property can be a house, apartment, or a condominium. Investment properties cannot be the borrower’s primary residence, although there is a possibility to live in a unit if the property is a multi-unit building.
Investing in a property can come with many advantages, including providing an additional source of income and the possibility of receiving tax benefits. There are several different types of investment loans to choose from, including conventional mortgages, hard money, and fix and flip loans, to name a few. Foundation Mortgage can work closely to determine the best fit for you. Investment property loans tend to be a higher risk for lenders because sometimes the investment may not be successful. Therefore, investor loans generally have higher interest rates and more stringent lending requirements.
Qualifying For An Investment Property Loan
In order to qualify for an investment property loan, the requirements usually include:
- A good credit score – with a higher credit score, you will be able to secure better interest rates and more flexible loan terms. For an investor loan, a score of 720 or higher is generally required.
- A down payment – you will usually be required to pay a down payment of at least 15-20%
- Available cash reserves – a six month supply of funds is desired by lenders to ensure that you can afford property maintenance and repairs
- Proof of income – You must be able to verify a steady flow of income with payment stubs and tax documentation
- Debt-to-income ratio – the amount of money you earn that you pay towards your debt must be lower than 50% to guarantee that you are able to afford the monthly mortgage payments
Getting Assistance With a Investment Property Loans
Investing in a property that you can either rent out or resell can be an excellent source of additional income. If you are looking to buy a home with an investment property loan in the areas of Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, Foundation Mortgage can help you find the best option for your financial situation. Contact our office today for a consultation.