Investment Property Loan Types: American United Capital Joe Siegel
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2015
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English
Documents
2015
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Investment Property Loan Types:
American United Capital Joe Siegel
An investment property mortgage 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 provided by Joe Siegel American United Capital.
Residential Property Investment Loans
Residential property investment mortgages have similar qualification guidelines as standard
owneroccupied mortgages. Although, they do have higher down payment and credit score requirements.
Below is a summary of the general guidelines for residential investment mortgages.
• 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.
Commercial Property Investment LoansCommercial 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
• Debt Service Coverage - This is a ratio used by lenders to calculate the property's ability to
generate cash flow. It is a calculation comparing the net operating income minus the mortgage
payment and the other debt payments.
To get more information about American United Capital Joe Siegel visit at:
http://www.americanunitedcapital.net/Joe-Siegel.html
