to get a Rental Property Loan with zero down payment is every Investor’s dream. Who would have ever guessed that there would be a home loan that would let you buy rental property with zero down? But it is a reality.
Here are the three big things you must keep in mind when getting Rental Property Loan with nothing down.
You must have a credit score of at least 680. This score is the national average of credit scores.
You must have 6 months of payments in reserves. In other words you need 6 months of principal, interest, taxes and insurance readily available. The reserves can be in the form of checking, savings, 401K, stocks, or bonds.
The lender may not allow the rent to be included in your debt to income ratios if you have never owned rental property loan before. But they may also allow the rents to be included if you already have a signed lease agreement. Each lender is different so it’s worth shopping around.
Please keep in mind that if you buy rental property with zero down you may have negative rents. In other words you may be losing money every month because you can not charge enough to cover your monthly payment. You have to decide if you can live with this kind of alligator.
Hard Money Loans for Investment Properties are very common. This type loan offers Fix and Flip Loans to buy & rehab a rental property. To get a rental property loan with zero down you more than likely will need to do a full document mortgage. With a Hard Money Real Estate Loan, you will need very minimum documentation. After Hurricane Harvey, Houston Real Estate Investors used Houston Fix and Flip loans to buy and fix damaged homes. In other words Hard Money Loans Houston have help recover from the storm. Hard Money Rates are much higher than Conventional Home Loans.
However, for those with credit scores at 720 or higher you may qualify for a stated income loan. With a stated income loan you do not need to prove your income. You just say how much it is. Most of these programs will not loan with the stated option if there are negative rents.
For a smaller Investor you have several choices of loans. You can get a non Owner occupied Private Money loan in all States except California & Nevada thru UMS PROS. This type loan is a loan to your LLC based on the Asset. Contact Zee for this type of loan at: firstname.lastname@example.org.
You can also get a Bank loan which is called a Conventional loan. Charles ( nmls# 96665) is employed by an FDIC Bank and does Mortgages to Homeowners in all 50 States thru the Bank. Contact Charles for a Conventional Bank loan at email@example.com.
These loans are very different and the requirements are different. The Conventional loan thru the Bank will be to YOU and show on your credit. It is normally a Fannie Mae or a Freddie Mac government guaranteed loan. The loan will require tax returns & Income to qualify.
The zero down rental property loans are structured as an 80/20 loan. In other words you are getting two loans. A first mortgage at 80% of the purchase price and a second mortgage at 20% of the purchase price. You also have several other options as far as choosing an ARM, a fixed rate product, or interest only.
These loans also have pre-payment penalties, unless you live in a state where pre-payment penalties are not allowed. Often time you can have the seller pay up to 2% of the purchase price towards your closing costs. If you get the seller to agree to this. You may only have to come in with 1.5% to 2% of the purchase yourself in closing costs.
If you truly want buy a rental property. You will want to call your local mortgage broker and find out more information or even see if you qualify. Of course if they do not offer this type of program keep calling until you find someone who does. It is not impossible to buy rental property with zero down. You should consider Hard Money Loans for Investment Properties.
If you are buying an Investment property contact Zee to get the latest in Private Money Loan Programs in all States except California & Nevada. Zee@umspros.com