Home Buying in 78130>Question Details

Donna Rains, Home Buyer in New Braunfels, TX

What special requirements do we need for a mortgage if we want to buy a second property to use as rental?

Asked by Donna Rains, New Braunfels, TX Sat Aug 22, 2009

We want to buy another property to rent but don't know how that works as far as getting loan for a second house? Do we need 20% down or more and do we need rent reserve? Thanks.

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Ok... I will level with you on this one... IT DEPENDS ON THE HOUSE! If the home is a Fannie Mae HomePath home... you can buy an investment property for as little as 5% Down!!! Some of these homes are AMAZING DEALS as HomePath Renovation will help you to finance the repairs on the beater homes.. We have done quite a few of these lately (as my wife is one of the few lenders able to do HomePath loans) and I have to say... very neat deal. There is no mortgage insurance... tons of perks.... to many to list here.

If the home is not a HomePath home... then the old traditional 20% down comes into play. Some lenders will require reserves, and others wont... depends on your credit score. Some lenders will count any 401K or retirment accounts you have as "reserves"

There are some "hard money" lenders out there that will court you with 10% down payments, but their rates are usually high, and most of them want you to re-sell or refinance the property as soon as you can... which you can do.. I have several investors that used "hard money" to obtain the property, and then refinanced the loan later (depending on the market value vs. the owed balance)

Sometimes, you just have to be a bit creative, but where there is a will.. there is a way.
0 votes Thank Flag Link Fri Dec 17, 2010
You will need atleast 20% down, and typically 6 months reserves. Buying Investments Properties is much mor difficult than it used to be a few years back, but Lenders are still doing them. Credit scores have to be in good shape also.

Investment Properties are considered risky in the eyes of the Lender, so the riskier the loan, the more solid the Buyer will need to be, and the higher the down payment amount. I don't want to make it sound like it is near impossible, but just be prepared to put 20% down and have some reserve money saved up.
0 votes Thank Flag Link Tue Sep 22, 2009
Hello Donna, you would need to speak to a qualified loan officer to best answer your question and guide you in the right direction. If you would like to talk to one and I will have one give you a call.

Take care.
Web Reference: http://www.fabailey.com
0 votes Thank Flag Link Sat Aug 22, 2009
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