People get when investing in real estate is similar to what people get when they want to out for an 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 improve cash flow generally.
What makes the difference is finding the right personal loan for a down payment on investment property. This could either cause a financial burden or make the entire investment profitable. It can be challenging to qualify for an investment property loan.
Personal Loan For Down Payment On Investment Property
This is quite true if you are still new to investing in properties and lots of first-time investors in real estate find it quite surprising that a twenty percent down payment is considered normal when investing in a property. A 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 can send investors to look for easier ways to get financial security.
Furthermore, a 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 and 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 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. This additional fee can also disrupt 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. Still, every piece of information you would gather in this guide helps make every step a little 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 the federal housing administration ensures. Since this sort of loan has backing from the federal government, the FHA has approved lenders willing to borrow out money or extend lower interest rates. So, despite having challenges with credit and income limitations, there is still a possibility that the lender can approve your loan. The 3.5 percent down payment that you must pay is one of the perks that can qualify an 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 to buy a house with about four units, which is true, provided that you intend to live 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 the 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
- Honorably discharged veterans
- Active duty service members
- Eligible surviving spouses
Like the FHA loan, you should be able to occupy at least one unit of the four units if you must use 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 that it requires you to have more than enough remaining entitlements to get another VA loan approved when necessary.