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.