8 Best Investment Property Loans of 2023
If you’re looking for a good investment property loan, you’ve come to the right place. We’ll go over the 8 best investment property loans of 2022 and their advantages and disadvantages so that you can make an informed decision before applying for any one of them.
The two main types of mortgages are:
Conventional loans are the most common type of mortgage. They’re backed by the Federal Housing Administration (FHA), Veterans Affairs (VA), Rural Development, and USDA/Rural Development programs. The FHA mortgage program is designed to provide affordable housing for low-income families who earn less than 80% of the median income in their area. VA loans are available only to veterans who have served at least 90 days on active duty and can be used for both purchasing homes and refinancing existing ones. While these programs offer similar funding mechanisms, they each focus on different target audiences with different lending requirements:
- FHA – Low-to-moderate income borrowers; Must meet at least one conventional lender requirement
- VA – Low-to-moderate income borrowers; Must meet all conventional lender requirements
1. Conventional mortgages
Conventional mortgages are the most common type of mortgage, and they’re available to borrowers with good or excellent credit. These loans are backed by Fannie Mae and Freddie Mac, two government-sponsored organizations (GSEs) that create secondary market loans through their lending divisions. They can be used to finance a home purchase, refinance an existing mortgage, or secure a line of credit for other purposes.
Conventional loans also come with a lot more flexibility than other types of debt; you’re allowed to make payments from anywhere in your paycheck instead of having the lender dictate when you should make them each month—and unlike some other kinds of debt like car leases or credit cards where you’ll have interest charged on top of principal payments every month until maturity, there won’t be any additional fees associated with these types either!
2. Government-backed mortgages
Government-backed mortgages are made by the government and are insured by the government. That means that if you don’t pay your loan back, you can rest assured that your lender will work with you to ensure that your payments get paid on time.
The criteria for qualifying for a government-backed mortgage is simple: You must be an owner-occupier with a good credit score (a minimum score of 700) who has lived at your property for at least one year before applying for a loan. Government guarantees do not cover mortgages taken out against investment properties or second homes; however, there are still plenty of options available in this category as well—just make sure not to rely solely on them!
Conventional loans are the most popular types of home loans and can be used by anyone that meets their lender’s requirements. They’re also the most common type of mortgage loan, making up about two-thirds of all mortgages issued every year. The interest rate on a conventional loan is usually higher than that offered by government-backed or non-conventional lenders.
The down payment requirement for a conventional mortgage varies between lenders but generally ranges from 5% to 20%.
FHA loans are insured by the Federal Housing Administration, which is part of the U.S. Department of Housing and Urban Development (HUD). They’re designed for low-income families and first-time homebuyers who have little or no down payment.
Because they have insurance backing them, FHA loans don’t require you to pay private mortgage insurance (PMI) on the loan; however, if you do buy a new property with an FHA loan after 2020 (when PMI will be discontinued), then your monthly payments may go up slightly because of this change in policy.
If you’re a veteran or active duty service member and want to buy a home, the VHA may be able to help. The VHA offers loans for primary residences only and they are not available for investment properties, rental properties, or vacation homes.
The application process is similar to applying for other types of mortgages: You’ll need your income information (and tax returns if applicable) as well as documents verifying that you own the property before submitting an application. The lender will then review your paperwork and determine if they think this is an appropriate loan option based on their underwriting guidelines; if so, they’ll issue a decision letter that includes terms such as interest rate, term length, and other details related to making payments on time every month throughout its term.
USDA/Rural Development Loans
USDA Rural Development loans are for low-income borrowers, and they’re available only in rural areas. These loans provide an advantage to first-time homebuyers who can’t get credit elsewhere.
The USDA loan program is also available to homes owned by senior citizens or individuals with disabilities, so if you’ve got a family member who needs help buying something that’s not a house but still meets the criteria above, this could be the right choice for them!
Jumbo loans are mortgages that exceed the limits set by the Federal Housing Administration. The FHA limits, which were established in 1937, are based on a home’s appraised value. A jumbo mortgage is larger than this amount and can be used to purchase properties that aren’t eligible for FHA or VA loans.
The most common example of a jumbo loan is for those who want to buy an apartment building and have no other option but to take out large sums of money from their own accounts. There are many other examples as well such: if you’re buying an existing house with property taxes in arrears; if you need extra cash because your business has failed; or even if your car broke down on highway 95 southbound near mile marker 497 (which happens too often).
HomeReady® and Home Possible® loans
HomeReady® and Home Possible® are Fannie Mae loans, meaning that you can get a mortgage from the Federal Housing Administration. This means that if your credit score is lower than 620, chances are good that you may be approved for these programs.
The main difference between them is the amount of money needed to qualify; while they both require down payments of at least 5%, Home Ready requires 15% while Home Possible only requires 10%.
Self-employed borrower loan programs
Self-employed borrowers may have difficulty qualifying for a mortgage.
Self-employed borrowers can qualify for a loan if they have sufficient income and assets. If you’re self-employed, it’s important to know that you can get a mortgage with the help of another person who has the same qualifications as you (and perhaps even more). You might consider asking your family member or friend if they’d be willing to co-sign on your loan with their own income and assets.
- Conventional loans are the most popular choice.
- Homeownership is important, and it’s important to understand the different types of loans.
- Some loans are better than others and some are more expensive than others, so it pays to do your research before making your decision.
If you’re looking for a mortgage, it’s important to understand the different types of loans. With these eight options, you can find one that is right for your situation.