Have you set up your mind about the rental property mortgage rate? Before you do, you have to know the type of rental property mortgage first, don’t you agree?
Five Types of Rental Property Mortgages
So far there are five types of rental property mortgage that you can choose if you want to purchase an investment property. Let’s learn each and everything we need to know regarding that topic.
1. Conventional Loans
Known as a conforming loan, the minimum down payment is 15%, but if you want to avoid mortgage insurance, you can pay up to 20% down payment.
2. Portfolio Loans
If you decided to loan from portfolio lenders, you could finance more properties but with higher interest rates. Why? Because they can make up their own loan rules for property investment.
If you want to rent a multi-unit property and live in one of them, you could choose to buy them with a VA or FHA loan. The minimum down payment is 0% for a VA and 3,5% for FHA.
4. Commercial Loans
This financing lender is useful for you if you want to buy projects for more than 4 units. But be careful, you have to establish a single asset bankruptcy-remote entity in order to prevent the owner from siphoning off the rental income without paying the mortgage.
5. Hard Money Loans
This kind of lender usually sets up high-interest rates and also steep fees. But of course, if you need money fast or found a great investment opportunity, these hard money loans might be useful for you.
Current Rental Property Mortgage Rate
So, if you are wondering what the current rental property mortgage rate? You have to know the fact that investment property rates are usually between 0,5% up to 0,75% higher than the standards.
That means if today’s average rate for a primary residence is 4,5% APR, you could predict an interest rate around 5% up to 5,25% if you want to invest in a single-unit property.
HELOC for investment property
For all of you who have never known what is HELOC for investment property, this is your answer. It’s a short from a home equity line of credit that you can get if you have built enough equity in your investment property. You can buy a new property, make improvements or even consolidate debt.
HELOC itself isn’t offered by all lenders; it depends on borrowers’ situation.