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Buy an Investment Property

Four things to know when you buy an investment property

Whether it's a single family home, townhome, condominium, or multi-family dwelling, here are some things to consider before you buy investment property.
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Different loan requirements

You'll need to cover the down payment and closing costs to buy investment property. Typically, loans used for a second home or rental property require a minimum 20% down payment since mortgage insurance is not available for investment properties. You'll also need to have 2 years of property management experience if you want to use your property's rental income to qualify for a loan.

Additional financial responsibilities

Investment property loans typically have higher interest rates, larger down payments, and different approval requirements. Also, you may have other expenses to consider before you buy investment property, such as homeowners association dues, cleaning services, flood insurance, and utilities.

Eligible properties

Certain property types — such as time-shares, coops, some manufactured homes, and bed and breakfasts — may not be available for mortgage or home equity financing. If you're considering financing one of these property types, be sure to talk to your home mortgage consultant first.

Using equity in your current home

If your current home has enough equity, you may be able to use it to buy additional property. Keep in mind, though, that by using the equity in your current home, your home becomes the security for the new loan. Talk to your home mortgage consultant for details about a home equity line of credit.

 Did you know? 

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