Investment Property Loans

If you are interested in buying a second home or an investment property, you may qualify to use your current home equity to finance the purchase of additional property. Investing in real estate is just like any other investment. You must evaluate both the benefits and the risks.

Before you invest, consider the following:

  • Mortgage insurance does not cover investment properties, so you need at least 20% down to get traditional financing.
  • Your credit score determines your interest rate. A low credit score means higher interest rates, or you can pay points to get a lower rate. The higher your credit score, the better.
  • Use smaller, local lending institutions. If your down payment is not as sizable as it should be, consider going to a neighborhood bank for financing instead of large, national financial institutions.
  • Ask for owner financing that includes specific details, like you want to borrow this amount with these terms.
  • Consider a home equity line of credit to purchase the investment property.
  • Determine the type of property you want to invest in – rental homes, condominiums, apartment buildings and so on.
  • Decide if you want to invest short- or long-term.
  • Ask yourself if you’re ready to be a landlord.

If you want to purchase rental property, research the property extensively to understand if the investment will bring a profit.