What are the loan basics for investment property?

Investment Property Loans for your Real Estate Investment Clients

investment-property mortgage loan alpharettaFor some reason, this week was Investment property loan week.  With that in mind, I wanted to just cover a couple of investment property loan basics for you.  Here we go:

  1. Loan to Value – They can put as little as 20% down, but 25% down gets a much better rate.
  2. Seller Paid Closing costs cannot exceed 2% of the sales price
  3. Investors can do a cash out loan to 75% on a 1 unit property
  4. Investors will need to show 6 months reserves for every investment property that they have as investment property
  5. Some lenders will allow investors to have up to 10 properties.
  6. If an Investor wants to purchase a home with all cash and rehab the home, they will need to wait 6 months to refinance based on the new appraised value, otherwise, they will be required to use the original purchase price as the value of the home.
  7. The property must meet Conventional HUD minimum property standards(not be in need of substantial repair)

This is a conventional loan and is considered permanent financing, and is not the loan an investor is looking for to purchase a home that is going to be remodeled or needs remodeling.