The feeling people get when it comes to investing in real estate is similar to that people get when they want to out for adventure. Taking your time and finding the right rental home can cause your investment to generate or boost your flow of cash every month or just improve cash flow generally. What makes the difference is finding the right personal loan for down payment for investment property and this could either cause a financial burden or make the entire investment profitable. It can be challenging to qualify for investment property loan.
Personal Loan For Down Payment For Investment Property
This is quite true is you are still new to investing in properties and lots of first time investors in the real estate find it quite surprising that a twenty percent down payment is considered as normal when it comes to investing in a property. Twenty percent down payment can be considered as a sizable amount but this is greatly dependent on the amount of the house you want to buy. High down payment requirements is capable of sending investors to go look for easier ways to get financial security.
Furthermore, lower down payment is also capable of causing certain complications but there are quite some alternative solutions that you should consider.
Common Investment Property Loans for Owner Occupants
An affordable way that one can be a real estate investor is through the owner occupant option and this is quite present in urban regions as well as other parts of the country where the cost of owning a house is extremely high. This takes away the stress of coming up with a twenty percent down payment but instead, it creates an option for you to purchase a house without paying so much out of your pocket. However, you still need to be aware of the fact that you have to tender a lower down payment.
Your lender may also require you to settle the mortgage insurance that you have on your loan and this additional fee is also capable of disrupting the potential savings that you must have secured while you were on a lower interest rate. In general, the loan preparation and loan application process can be very challenging but every information that you would gather in this guide helps to make every step a little bit easier. Below, you would find few loan programs that would help you save up some money if you are interested in owner occupant option;
The FHA mortgage loan is one that is insured by the federal housing administration. Since this sort of loan has backing by the federal government, the FHA has approved lenders that are willing to borrow out money or extend lower interest rates. Despite having challenges with credit and income limitations, there is a still a possibility that your loan can be approved by the lender. The 3.5 percent down payment that you must pay is one of the perks that can qualify an individual for the FHA loan.
The interest rates that are found on FHA loans most times are more affordable compared to other loans. The FHA loan can be used in buying a house with about four units and this is true provided that you intend living inside the house personally. Limits are placed on the amount that a borrower is allowed to collect and this is also based on where the property is located.
The VA Loan is another mortgage loan that has the backing of the government. You can be able to purchase four unit property if you qualify for a VA Loan without paying a down payment. You can only partake out of the VA loan if you are found eligible and if you belong to any of the following;
- Qualified members of the reservists and national guards
- Honorable discharged veterans
- Active duty service members
- Surviving spouses that are eligible
Similar to the FHA loan, you should be able to occupy at least one unit of the four units if you must make use of the VA loan to finance the purchase of a property. Furthermore, after a year, you are allowed to take out another VA loan on a new property and the process repeats as well. One last thing that you should note about the VA Loan is it requires you to have more than enough remaining entitlements so you can get another VA loan approved when necessary.