Best Investment Property Loans

Best Investment Property Loans

How to find the right financing for your next deal

An investment property generates income for its owner. By leveraging the down payment, the length of the payback terms, and the interest rate, an investor can maximize their earnings on investment property loans.

Using investment loans to develop where there is a demand for affordable houses to rent, for example, or to repair a property to raise its value and cash flow, investors can improve their returns even further.

Investment properties, on the other hand, are seen as a larger risk than personal house loans. The logic here is that if something goes wrong and the house loses money for the investor, it’s easier to walk away from a property that isn’t your primary residence.

We looked at 19 lenders and loan programs to find the best investment property loan alternatives based on what types of properties they may be used for, down payment requirements, current interest rates and APRs, loan size minimums and maximums, and the duration and complexity of the application process. Here are a few of our favorites.

5 Best Investment Property Loans of 2021

BEST OVERALL: Quicken Loans

Why We Selected It: We selected Quicken Loans as our best overall investment property lender because they lend nationwide, offer a wide range of loan types, and make applying for a mortgage online very simple for borrowers. Quicken also offers competitive rates, bolstering its reputation as the finest all-around mortgage provider.

Pros

  • There’s an online application and you can talk to live agents.
  • More than 60% of working Americans have their employment and income verified instantly.
  • Fixed-rate loans with periods ranging from eight to thirty years
  • Agency loans with a 3% down payment are available.

Cons

  • Quicken Loans does not provide HELOCs or home equity loans.
  • There are no physical branches to visit.
  • Only considers credit scores and debt-to-income ratios, not alternative credit data.

Quicken Loans began as a brick-and-mortar lender in 1985, then moved online in 2000. Its ascent coincided with the growth of the internet.

Quicken Loans is our favorite overall investment lender because it is simple to use for investors all across the country. When you fill out their online application, they have a large array of loan options that can be customised to your specific needs.

Quicken Loans offers fixed- and adjustable-rate home loans, mortgage refinancing, FHA, USDA, and VA loans, as well as jumbo loans for higher-priced homes on residential and multi-unit investment properties.

If you qualify for Quicken’s agency loans, you can get a conventional loan with a down payment as low as 3%. Otherwise, if your credit score is below 700, expect to put down 20%, and if your credit score is over 720, expect to pay down 15%.

A 30-Year Fixed loan now has a rate of 3.62 percent and an annual percentage rate of 3.86 percent. The rate on their 15-Year Fixed loan is 2.75 percent, with an APR of 3.21 percent.

Keep in mind that these rates and down payment percentages are only available on up to four investment properties, and they are only available on single-family houses or multifamily properties with up to four units.

Once you’ve reached that limit, you’ll need to look into bank alternatives like private equity and private or hard money lenders. These lenders frequently need a 30% down payment, with rates ranging from 3% to 6% higher.

The loan minimum varies by property type, however the maximum loan amount for their jumbo loan program is $2 million. Quicken Loans’ internet platform and loan processor is now Rocket Mortgage.

Rocket can access direct deposit information from 98 percent of U.S. financial institutions to examine employment, income, and financial holdings.

If you aren’t paid by direct deposit, Rocket’s access to numerous databases can verify your income and job information for around 60% of working Americans. This enables for quicker processing and a 30-day closing window.

BEST FOR VETERANS: Veterans United Home Loans

Why We Selected It: We selected Veterans United Home Loans as our top investment property lender for veterans because the company specializes in VA-backed mortgages and has professionals who know the program (and their specialized customer base) better than anyone else.

Pros

  • Customer service is available via phone 24 hours a day, seven days a week.
  • There is an online application as well as pre-qualification.
  • Each branch of the armed forces is represented by an advisor.

Cons

  • Does not provide HELOCs or home equity loans.
  • On its website, it is more difficult to discover information on FHA, USDA, and conventional loans.
  • Rates and fees are higher than those charged by some other lenders.

Veterans United, which was founded in 2002, is a full-service lender that specializes in VA loans for qualified veterans, active military personnel, and their spouses. In terms of volume, they are one of the largest VA mortgage lenders in the United States.

Flexible qualification standards, reduced rates and monthly payments, no down payments, and no private mortgage insurance are all advantages for investors. Veterans United offers VA loans with as little as 0% down payment, and they know how to make a VA loan work for an investor while staying within the program’s parameters.

In order to use a VA loan to buy an investment property, it must be a multifamily property with no more than four units and the investor must live in one of them.

This is a crucial condition, and if you don’t satisfy it, you won’t be able to use a VA loan to buy an investment property. If you adhere to this criterion, however, you will benefit from the low down payment and cheap interest rates offered by this government program.

Fixed and adjustable-rate mortgages, jumbo loans, refinance loans, and cash-out loans are among the products available. Rates fluctuate on a daily basis, and in March 2021, they ranged from 2.250 percent to 3.5 percent, with APRs ranging from 2.8 percent to 3.5 percent. 2

There is no minimum loan amount set by Veterans United. If the investor takes out a VA loan, the VA will only guarantee up to the loan maximum set by the county. The maximum is $548,250 in most counties, although it rises to $822,375 in select high-cost locations.

Veterans United examines your credit score, debt-to-income ratio, cash reserves, and income, as well as property inspection reports, appraisals, and title search findings, before approving your loan. The complete procedure should take four to six weeks. The initial pre-approval stage can be accomplished in large part online.

A copy of your driver’s license or other government identification, a copy of your DD-214 or Reserve/Guard points statements, a statement of service for active duty borrowers, recent pay stubs and W-2s for the last two years, recent bank statements, and disability award letters are some of the documents you will be asked to provide in order to use a VA loan for your investment property.

BEST FOR SINGLE-FAMILY HOMES: Citibank

Why We Chose It: We chose Citibank as our best single-family investment property lender because it offers a comprehensive suite of home loan products for investors, as well as more low-down-payment options than other lenders and some of the industry’s lowest rates and fees.

Pros

  • A wide range of lending choices are available.
  • On their website, you can customize mortgage rates.
  • In comparison to other lenders, we provide low rates and costs.
  • HomeRun scheme with a low initial price

Cons

  • Charges a fee for submitting a mortgage application.
  • To complete the loan application online, you’ll need assistance from a mortgage loan officer.

Citibank, which was founded in 1811 in New York, offers a variety of instruments that investors can employ to finance their single-family home income assets.

Fixed-rate mortgages with terms of 10, 15, 20, and 30 years are available, as well as adjustable-rate mortgages with terms of 3/1, 5/1, 7/1, and 10/1. Citibank was named the top bank for single-family houses because of its wide range of lending options and consistently low rates.

In most of the country, their conventional loans go up to $548,250, and in some high-cost locations, up to $822,375. Citibank can satisfy your needs with a jumbo loan over those prices.

In this aspect, the program is similar to the VA loan, with periods up to 30 years and interest rates equivalent to normal mortgage rates. The minimum loan amount is set on a case-by-case basis, although it often ranges from $50,000 to $75,000.

BEST FOR COMMERCIAL PROPERTY: Lendio

Why We Selected It: We selected Lendio as our best option for commercial property loans because their marketplace platform allows an investor to fill out a single application and obtain quotes from various lenders.

Pros

  • Application time: 15 minutes
  • Financing choices and lenders are plentiful.
  • Personalized assistance and knowledge to assist you in interpreting loan offers

Cons

  • Some loans have high interest rates.
  • Credit check with a hard enquiry
  • To access loan terms, you must fill out their online application.

Lendio is a free online tool for investors that allows them to receive prospective commercial loan offers from more than 75 lenders in minutes. Lendio has funded over 216,000 loans, earning it a solid reputation for success.

For commercial property investors, a marketplace like Lendio is ideal since it allows them to browse for the best terms quickly and easily.

Unlike other commercial property possibilities, they make the process simple by allowing you to shop rates with just one application.

Residential, multi-unit, and commercial real estate loans, as well as a variety of business loans, are all underwritten by Lendio lenders.

If you qualify for one of the agency loans, such as the FHA, the down payment can be as low as 3%. Traditional commercial property credit programs, on the other hand, require a 25% to 30% down payment.

For commercial property loans, interest rates start at 4.25 percent on the Lendio platform.

4 Terms range from 20 to 25 years, with a minimum funding time of 45 days. The loan amounts for commercial properties range from $250,000 to $5 million.

For an efficient underwriting experience, Lendio recommends having the purchase contract, property blueprints, market analysis for the property, project budget and scope of work, and appraisal of the property’s existing problems available. The online application takes about 15 minutes to complete, and once you’ve chosen a lender, paperwork are shared instantly.

BEST FOR LOW DOWN LOANS: Northpointe Bank

Why We Selected It: We selected Northpointe Bank as the best bank for low-down loans because of its amazing degree of ease, as well as its numerous loan alternatives, including several that are 100% financed.

Pos

  • A complete list of lending options is available.
  • Provides a no-money-down loan with a shorter repayment period.
  • For the convenience of customers, there is a mobile app.
  • All 50 states, as well as Washington, D.C., are served.

Cons

  • Only one ARM product (five-year)

Northpointe Bank has been named as one of the top-performing banks in the country by Independent Community Bankers of America® (ICBA) for the past six years, out of a field of nearly 5,500 ICBA member banks.

If you’re looking for a low-down-payment investment loan, Northpointe Bank is the place to go. They have three lending options that don’t require a down payment, making them our top pick.

There is no down payment, no monthly insurance, adjustable loan terms, and a maximum loan amount of $750,000 with the EquityBuilder program.

Northpointe Bank is a VA lender as well. You can finance single-family, multi-unit, and condos with a VA loan with no down payment. Because the VA loan can only be used for a primary residence, you must live in one of the units if you buy a multi-unit property as an investment.

The Doctor loan for rehabs is their third option for a loan with no down payment. These loans range from $1.3 million to $1.3 million and can be used to buy or refinance a home. There is no need for mortgage insurance.

The current interest rates range from 2.6 percent to 3.75 percent, with APRs ranging from 2.7 percent to 3.8 percent.

Interested investors should go to the company’s website and fill out the Find an Advisor form. After that, the loan counselor will call you to acquire the necessary information.

Clients are expected to prepare documentation such as pay stubs and bank statements in order to expedite transactions.

Michael Will

At Brasiltransbox.com Michael Will works as a writer and editor. He has 5 years of expertise in the business world, with an emphasis on small enterprises and startups. Digital marketing, SEO, business communications, and public policy are just a few of the areas he's addressed. He's also written about artificial intelligence, the Internet of Things, and blockchain, among other new technologies and their intersections with business.

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