Real Estate Consultant

One of the most difficult parts of purchasing your investment property can be your down payment. When you purchase a primary residence, there are many low down-payment options, but for investment property purchases lenders typically require a down payment of at least 20%. If you purchase two or more units, you may have to pay a down payment between 20% to 30%.

If you want to make lower down payments then, the property has to be your primary residence. There are many low down payment options available for purchasing a primary property that include FHA and VA loans. These options allow you to buy multifamily properties up to four units as long as you are staying in one of them, while you can rent the other units out. So if it is a primary property that you are buying then down payments can be as low as 0 to 5%.

Number of Units Lower Payment Eligibility Requirements

In a FHA Home Loan, if you are buying 1 – 4 properties then the down payment will be 3.5%, but minimum credit score of 580 is generally required. Lower scores are accepted with a large down payment. Banks will usually require three months cash reserve if you are buying 3-4 units or more.

VA Home Loan

if you are buying 1 – 4 properties then the expected down payment will be 0% , but for this option a minimum credit score of 620 generally required. Buyers should be a member of the U.S. military, reserves, guard, veteran, or a member spouse.
 

Borrowing Money For Your Investment

The following factors will help determine how much money you can borrow for to purchase your investment property:

• Down payment. Investment property loans generally require a down payment of at least 20 percent, although if you living in one of the units of a rental property then you may be eligible for low down payment options.
• Income. When you have more income then you can borrow more from the bank. The question then arises, can you include rental income from the property you want to buy on the mortgage application? If you have less than two years’ experience managing an investment property, many lenders does not include rental income in your application for mortgage.
• Credit score. If you have a good credit score, then can secure a low interest rate. This will allow you to borrow more, because you’ll be saving money over the life of the loan.