Forgotten Your Password?

Need to Register?

Question Icon

Is there a diffence between a loan for an investment property and that for a home that the purchaser planned to live in?

by noemai_489_667 from , . Mar 22nd 2013 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,728 contributions

Big difference, and the loan pricing shows it.. Investor loans are a more risky loan for investors, and because of such, they usually require larger down payments, and higher interest rates.. Some folks will try to "Cheat the System".. And say they are going to live in a property they're really purchasing as an investment.. The incentive is obviously a lower rate and lower down payment, however this is considered loan fraud and is illegal... .. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Mar 22nd 2013
1
0
Charlie Sparks (CharlieSparks)
#9 ranked lender in New Mexico - 401 contributions

Investment property loans on single family residential (SFR) property typically require 20% or more down and the interest rate is about .5% higher than an owner occupied loan. I have a product for 15% down on a SFR.

Mar 22nd 2013
0
0
Bro Nam (bro1234@gmail.com)
#30 ranked lender in Missouri - 16 contributions

Yes, long story short: If it is investment you are limited to conventional financing. This means no FHA or VA financing. You may do an IRRRRL on an investment property with a VA loan if the home is already in a VA loan. You need to have 25% equity in the home if it is an investment property for both purchase and refinance. If you are claiming it as a primary residence be ready to prove that it is your primary through mail, utility bills, insurance, and the absence of schedule E income on your tax returns.

Mar 22nd 2013
0
0
Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,244 contributions

Absolutely! An owner occupied property will have better rates and a lower required down payment.

Mar 22nd 2013
0
0
Brenda Sanders (Cruisinlady)
#188 ranked lender in Florida - 34 contributions

Absolutely. There is more risk when a person does not actually live in a property, therefore lenders want more of your investment into the property. Typically you are looking at 25-30% down payment if you are not occupying the property. Also,the rate may be higher. I hope this answers your question. Brenda

Mar 22nd 2013
0
0
Scott Gimbel (TeamGimbel)
#868 ranked lender in California - 8 contributions

Yes, you can expect a higher interest rate and higher down payment in most cases. Contact me if you are looking in California or Illinois.Scott Gimbel - Serving Mortgage Clients for 25 years

Mar 22nd 2013
0
0
Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,244 contributions

Keep in mind you usually have to sing an affidavit stating you will be living there as you primary residence.

Mar 22nd 2013
0
0
Pete Bass (PeteBass)
#30 ranked lender in Connecticut - 476 contributions

Yes, normally it is 20% for a single family home, If you are looking at a multifamily ( 1-4 units) you may be required to put an add'l 5% to 10% more down. Also, some Lenders and banks require past landlord experience. Before going with a lender, ask if this is a requirment for their investors. Rates tend to be about .5% higher due to risk.If you are looking to purchase in CT, we have programs with 20% down-Hope that helps,

Mar 22nd 2013
0
0
Jason Vondrak (jvondrak)
#221 ranked lender in California - 1,741 contributions

Yes, investment properties require a larger down payment and have a slightly higher interest rate. Lenders view investment properties as more of a risk, since the borrower will not be living in the property, so that's why they require more of a down payment and a higher interest rate. You also cannot use FHA or VA funding for investment properties.

Mar 22nd 2013
0
0
Ritchie Baumann (Ritchie)
#28 ranked lender in Wisconsin - 28 contributions

Will may also have to have 6 months of mortgage payments in a reserve account such as a savings account for an investment property. Not for the case for a house the purchaser plans to live in.

Mar 22nd 2013
0
0
Tracey Bartlette (traceybartlette)
#44 ranked lender in South Carolina - 5 contributions

Yes investment property require more money down. We also have financing for 2nd homes. Those loans are for people that aren't going to live in it more then 6 months out of the year but aren't planning on renting it either. Those require less money down then investment property and they're usually isn't much difference if any in the rates on second homes and primary homes.

Mar 22nd 2013
0
0
Carlos Figueira (carlosfigueira)
#108 ranked lender in New Jersey - 199 contributions

All is accurate, larger daown payment and higher rate for a investment property

Mar 22nd 2013
0
0
Barb Lanis (BarbLanis)
#69 ranked lender in Illinois - 663 contributions

Investment property = Larger down payment, higher interest rate. Owner occupied property = Small down payment, lower rate.

Mar 22nd 2013
0
0
Dave Metsker (DaveMetsker)
#36 ranked lender in Oregon - 2,318 contributions

Investment properties require higher down payments and higher interest rates, due to the increased risk of default.

Mar 22nd 2013
0
0
Michael Stephan (Michael_Stephan)
#23 ranked lender in Connecticut - 11 contributions

dozens of underwriting guidelines come into play here, not all of whichwere touched on in this thread - obviously - because there is no applicationto review. 1. the rate could be 1-2% higher! - then watch out for points and fees - especially if it's a condo.2. in general only 70% of rental income will be added.3. my in-laws recently were looking at an in-town condo they thought about financing withthe 2.4% rate from their credit union, (which i pointed outwas based on owner occupany, cuz all lenders run ads with the lowest rates possible).After talked over their scenario and came back at 3.9%, plus points, plus fees! (they didn't buy).

Mar 22nd 2013
0
0
Jason Robinson (CFIsupport)
#56 ranked lender in Georgia - 106 contributions

Yes based on occupancy risk, investment property financing is different.

Mar 22nd 2013
0
0
Joe Metzler (JoeMetzler)
#17 ranked lender in Minnesota - 4,248 contributions

YES, there are a few differences. The biggest being a bigger down payment requirement, a higher interest rate, and tougher qualification standards.

Mar 23rd 2013
0
0
Subscribe to our news feed.