Loan on property

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Loan on property
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Investment Property Loan Types
An investment loan on property is a loan for
non-owner occupied property. There are two main
classifications of investment property mortgages.
These classifications include commercial and
residential. A commercial property mortgage is
for a dwelling that contains 5 or more units
and/or is zoned as commercial. A residential
investment mortgage is for a dwelling that is one
to four units and is zoned residential.
Commercial and residential mortgages are two
completely different loan types and have
significantly different qualification standards.
The following is a basic description of each
mortgage type. Residential loan on
property Residential property investment
mortgages have similar qualification guidelines
as standard owner-occupied mortgages. Although,
they do have higher down payment and credit score
requirements. Below is a summary of the general
guidelines for residential investment mortgages.
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Credit Score Requirement - The minimum credit
score requirement is typically 680 or above for
investment mortgages. Debt to Income Ratio -
Typically, the debt ratio limit for an investment
mortgage is 40 of the borrower's verifiable
income. Besides W2 income, the borrower's last 2
years tax returns will be needed to calculate the
income that can be used from other rental
properties or other sources of income. Down
Payment - Investment property mortgages require
at least 15 down, but the down payment
requirement increases with lower credit scores
and the greater the number of units in the
property. Income - Lenders typically will only
use rental income if the borrower has a two-year
history of owning rental properties. This is
usually documented via the tax returns and
schedules.
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Commercial loan on property Commercial loans
typically have higher rates, greater fees, and
shorter terms than residential mortgage. The two
most important factors for lenders on this loan
type include a positive cash-flow for the
property, and the borrower's past commercial
property management experience. Below is a
summary of the general guidelines for residential
investment mortgages. Credit Scores Requirement
- The minimum credit score requirement is
typically 720 to 740 for a commercial loan.
Down Payment - The minimum down payment for a
commercial mortgage is typically 30 or greater.
When refinancing, the maximum equity position is
usually 70 of the appraised value of the
property.
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