If you’re contemplating purchasing an investment property, it’s important to understand the different types of investment property loans and the requirements involved. With the right loan in place, you can finance your investment and take advantage of the many benefits that come with owning an investment property.

What Are Investment Property Examples?

There are many types of investment property, but some of the most common examples include single-family homes, duplexes, townhouses, and small apartment buildings. These properties are usually purchased to generate income through rental income or appreciation of the property’s value.

Investment properties can be a great way to build wealth, but they also come with a certain amount of risk. It’s quite important to do your research on the examples and understand the market before investing in any property and taking out a loan.

What Are Investment Property Loan Options?

There are a few different types of investment property loans, each with its own set of eligibility requirements and terms. Here are some loan options you can choose to take out:

• Conventional Loans. A conventional loan is a common loan type that is typically available through banks and credit unions. The eligibility requirements and terms of these loans can vary widely.
• FHA Loans. An FHA loan is a loan that the Federal Housing Administration insures. These loans are available through participating lenders and are typically used by first-time homebuyers or those with low credit scores.
• VA Joint Loans. A VA joint loan is a loan that is guaranteed by the Department of Veterans Affairs. These loans are available through participating lenders and can be used by eligible veterans to purchase a home.
• Hard Money Loans. A hard money loan is an option secured by real estate. These loans are typically available through private lenders and are usually utilized by investors to purchase properties.

What Are Investment Property Requirements?

It’s also good to know the most general requirements that must be met in order to qualify for any investment property mortgage. Here are some examples of what’s needed:

• Higher Down Payment. Investment property mortgages typically require a higher down payment than owner-occupied mortgages. The reason for this is that investment properties are considered to be a higher risk by lenders.
• Higher Credit Score. In order to offset the aforementioned risk, lenders typically require a higher credit score from borrowers looking to finance an investment property. They may also require proof of income and assets.
• Mortgage Reserves. Additionally, it is important to have mortgage reserves set aside. The presence of mortgage reserves will show the lender that you are prepared for any potential unforeseen expenses.
• Rental Income Proof. Be sure to have proof of rental income ready to go. This will show the lender that your investment property is actually generating income and therefore is a sound investment.

Are You Ready to Purchase an Investment Property?

An investment property loan is a mortgage obtained to buy a property for investment purposes. There are several different types of investment property loans, each with its own set of requirements. Borrowers should carefully compare the options before choosing a loan.

Looking for investment property loans in Arizona? Mortgages by Misty can help you choose the right loan product to get your future Tempe home, getting attractive benefits and access to the Phoenix metropolitan area. Contact Misty today at (480) 618-5358.