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If investing in real estate is on your to-do list, you may be asking yourself a lot of questions. For starters, just how is financing investment property different than your home mortgage? That’s a question we love to help clients answer.

There are many reasons to buy investment property:

  • Collect rent for an income stream
  • Upgrade and flip for profit
  • Build equity in real estate

There are also many types of investment properties, including one-unit, multiple units, and commercial buildings.

Here are just a few of the questions prospective investors like you have when it comes to buying an investment property.

Is the mortgage loan the same as it is for your primary residence?

No. Qualifications and terms are likely different if you are not going to live in the property. Lenders will review your credit score and proof of income, among other factors.

What can I expect for a down payment on an investment property?

You may be expected to provide a larger down payment since lenders need to offset the risk that a buyer may not be able to make monthly payments on an investment property.

Can I use prospective rental income to qualify for a loan?

In most cases, you can’t declare income you have yet to receive in order to qualify for a mortgage unless you can prove previous property management experience.

What if I’m going to live in the property while I renovate it for resale?

Terms on the mortgage may be more favorable if you will use the property as your primary residence.

Besides income, what are the benefits of owning an investment property?

There may be benefits at tax time if you own investment property. Depending on how the property is used, you can deduct mortgage interest, utilities, maintenance, and depreciation. We recommend that you consult your tax advisor before making an investment decision.

Your circumstances are unique and we pride ourselves on providing personalized solutions. That’s a great combination when it comes to buying an investment property. We would welcome the opportunity to answer all your mortgage questions as you take steps to invest in real estate.