How to Get an Investor Mortgage
Demonstrate good credit., Make a large down payment., Shop around for the best mortgage., Get help from a mortgage broker., Apply for a loan.
Step-by-Step Guide
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Step 1: Demonstrate good credit.
Lenders will examine your credit score and verify your income before offering you an investor mortgage.
Expect to be held to higher standards than if you were applying for a non-investor residential mortgage.
Lenders will want to make sure your income and assets will cover your own mortgage payment and debt obligations, as well as the new payments you will need to make on the investment property.
Maintain a credit score of at least
740.
Most lenders will charge higher interest rates on investor mortgages if the borrower has a credit score lower than
740. -
Step 2: Make a large down payment.
It will need to be at least 20 percent of the purchase price.
For example, if the house you buy is $200,000, your down payment will need to be at least $40,000.
Remember that mortgage insurance is not an option on investment properties.
Therefore, lenders are going to be more comfortable with higher down payments.
It is rare to get a second mortgage just to cover your down payment.
Most lenders will not allow it.
Cash for down payments will be necessary.
Try to pay even more than 20 percent on investment properties.
Lenders will likely offer you a better interest rate if you put more of your own equity into the deal. , Talk to multiple lenders, starting with those you may have worked with in the past.
Compare interest rates, closing costs and other payment terms.
Try neighborhood banks or local lenders instead of large, nationwide financial institutions.
These businesses will be more interested in community development and will have a better understanding of the local market.
They might be more willing to work with you. , If you do not want to talk to multiple lenders before settling on one, use the services of a broker.
Mortgage brokers specialize in finding money for investors.
Use a mortgage broker you know, or one who is recommended by friends, family or colleagues.
Make sure your broker is experienced, respected and belongs to professional organizations that require high ethical standards. , Once you have found a lender that you can work with, fill out all the application materials required to get an investor mortgage.
You should have a decision in a matter of days.
Answer any questions about your application and provide any required information.
The more details you provide about your finances and the property you want to buy, the quicker the process will move. -
Step 3: Shop around for the best mortgage.
-
Step 4: Get help from a mortgage broker.
-
Step 5: Apply for a loan.
Detailed Guide
Lenders will examine your credit score and verify your income before offering you an investor mortgage.
Expect to be held to higher standards than if you were applying for a non-investor residential mortgage.
Lenders will want to make sure your income and assets will cover your own mortgage payment and debt obligations, as well as the new payments you will need to make on the investment property.
Maintain a credit score of at least
740.
Most lenders will charge higher interest rates on investor mortgages if the borrower has a credit score lower than
740.
It will need to be at least 20 percent of the purchase price.
For example, if the house you buy is $200,000, your down payment will need to be at least $40,000.
Remember that mortgage insurance is not an option on investment properties.
Therefore, lenders are going to be more comfortable with higher down payments.
It is rare to get a second mortgage just to cover your down payment.
Most lenders will not allow it.
Cash for down payments will be necessary.
Try to pay even more than 20 percent on investment properties.
Lenders will likely offer you a better interest rate if you put more of your own equity into the deal. , Talk to multiple lenders, starting with those you may have worked with in the past.
Compare interest rates, closing costs and other payment terms.
Try neighborhood banks or local lenders instead of large, nationwide financial institutions.
These businesses will be more interested in community development and will have a better understanding of the local market.
They might be more willing to work with you. , If you do not want to talk to multiple lenders before settling on one, use the services of a broker.
Mortgage brokers specialize in finding money for investors.
Use a mortgage broker you know, or one who is recommended by friends, family or colleagues.
Make sure your broker is experienced, respected and belongs to professional organizations that require high ethical standards. , Once you have found a lender that you can work with, fill out all the application materials required to get an investor mortgage.
You should have a decision in a matter of days.
Answer any questions about your application and provide any required information.
The more details you provide about your finances and the property you want to buy, the quicker the process will move.
About the Author
William Ross
A passionate writer with expertise in organization topics. Loves sharing practical knowledge.
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