Investment Loan Options
Investment loans are tailored to help individuals and businesses finance the purchase or development of income-generating properties such as rental homes, multifamily units, or commercial real estate. These loans are structured differently than traditional home loans and often come with unique requirements and benefits.
Popular Investment Loan Options
Conventional Loans
Ideal for financing single-family homes, condos, or smaller multifamily properties (up to 4 units). Requires a down payment of 15-25%, depending on property type. Competitive fixed or adjustable interest rates. Stricter credit and income qualifications than primary residence loans. Best For: Experienced investors with strong financial profiles.
FHA 203(k) Loans (Limited to 4-Unit Properties)
Allows investors to purchase and renovate properties with a single loan. Lower down payment requirement (as low as 3.5%). Requires the borrower to live in one of the units for at least a year (ideal for house hacking). Best For: First-time or small-scale investors willing to live in the property temporarily.
Commercial Real Estate Loans
For properties with 5+ units or other income-producing commercial properties. Down payment requirements typically range from 20-30%. Loan terms vary, with balloon payments or shorter amortization schedules. Best For: Investors in larger-scale multifamily or commercial projects.
Portfolio Loans
Offered by private lenders, these loans are held in-house and not sold to secondary markets. Flexible terms and underwriting requirements. Often used for unique property types or unconventional situations. Best For: Experienced investors with non-traditional needs.
Hard Money Loans
Short-term loans secured by the property itself. High-interest rates and fees. Used for quick purchases or renovations (e.g., fix-and-flip projects). Best For: Investors needing fast funding for short-term projects.
DSCR Loans (Debt Service Coverage Ratio)
Focuses on the property's income potential rather than the borrower's personal income. Down payments typically range from 20-30%. Simplified approval process based on the rental income covering the loan payment. Best For: Investors with multiple properties or inconsistent personal income.
Key Considerations for Investment Loans
Higher Interest Rates: Investment loans often come with slightly higher rates than owner-occupied loans.
Down Payment Requirements: Be prepared to put down more than you would for a primary residence.
Rental Income: Some lenders may consider projected rental income when qualifying borrowers.
Experience Level: New investors might face stricter terms compared to seasoned property owners.
Are Investment Loans Right for You?
Investment loans provide flexibility for building wealth through real estate, catering to a wide range of strategies, from long-term rental income to short-term property flips.
The down payment percentages and program features referenced above are general program guidelines and do not constitute an offer or commitment to lend at those terms. Actual rates, Annual Percentage Rate (APR), repayment terms, and eligibility requirements are determined based on your individual credit profile, property type, loan amount, and other factors. Rates are subject to change without notice. Contact NNB Financial, Inc (NMLS #2435057) for current program details and a personalized quote.