Additional financial responsibilities
- Investment property loans typically have higher interest rates, require larger down payments, and have different approval requirements than properties occupied by their owners.
- You may have other expenses in addition to your monthly mortgage payments on the property, such as homeowners association dues, cleaning services, flood insurance, and utilities.
- Carefully consider your monthly cash flow to ensure you're able to manage the additional expenses and potential tenant vacancies.
- You will have to calculate how much is needed for closing costs, repairs and ongoing expenses such as maintenance and utilities.
Different loan requirements
- You will need to have funds to cover the down payment and closing costs to purchase your investment property.
- Typically, loans require a minimum 20% down payment, as mortgage insurance is not available on investment properties.
- If you plan on using this property’s rental income to qualify for the loan, you must document property management experience for at least two years.