Investment Property Loans in Virginia
With the cost of living skyrocketing, more and more homeowners are supplementing their 9-to-5 jobs with income from renting and flipping houses. If you are thinking about wading into the real estate world, an investment property loan could be a savvy financing tool.
Apply for an investment property loan
In short, this lending option3 allows borrowers to purchase income-generating properties. You may have plans to rent out a countryside bungalow, or you may want to flip and sell a beachside condo for extra cash – no matter your goals, our Mortgage Coaches can help you get approved for an investment property loan in Virginia.
- What Is an Investment Property Loan?
- Investment Property Loan Eligibility in Virginia
- Types of Investment Property Loans Offered in Virginia
- Estimating Cash Flow for Investment Property Loans
- Pros & Cons of Investment Property Loans
- Work With Dash to Secure an Investment Property Loan
What Is an Investment Property Loan?
An investment property loan is designed for borrowers looking to channel their money into real estate. These mortgages can be used to purchase many different kinds of income-generating residences, including:
- Manufactured homes
- Single-family houses
- Duplexes and quadplexes
Sounds pretty awesome, right? The only catch is that investment property loans are risky, at least from a lender’s perspective. Banks know that borrowers are more likely to default on investment properties than primary residences. To account for this risk, they rev up the APR3.
Investment Property Loan Eligibility in Virginia
Lenders have fairly stringent eligibility requirements for investment property loans. Though these requirements vary from lender to lender, a borrower in Virginia must typically have:
- A down payment of at least 15 to 20% for single-family homes. If you want to purchase a duplex or quadplex, expect to put down 25% or more.
- A credit score of at least 620. But the higher your credit score, the better your APR3.
- A debt-to-income ratio of 36% or less. To calculate your DTI, divide your monthly debt expenses by your pre-tax income.
- Sufficient cash reserves to cover the mortgage for up to six months.
- An estimate of the cost of necessary repairs if you want to renovate the home. Lenders may also request the after-repair value (ARV), which is the value of the home after renovations have been made.
Feeling nervous about qualifying for an investment property loan in Virginia? Contact us. We’ll connect you with a Mortgage Coach who can address all of your concerns.
Types of Investment Property Loans Offered in Virginia
Like popsicles, investment property loans come in all sorts of flavors. But with so many options, it can be tricky to know which mortgage is right for you. Fortunately, Dash helps borrowers find the sweetest deal.
Peruse the investment property loans we offer, then reach out. We’ll connect you with a Mortgage Coach in Virginia.
- Virginia Conventional Loan: The traditional lending option with competitive interest rates and affordable down payment options.
- Virginia FHA Multifamily Loan6: A government-backed loan that’s designed for borrowers with less-than-stellar credit.
- Virginia VA Multifamily Loan5: A no-money-down2 loan available to eligible veterans.
- Portfolio Loan: A private lending option that lumps multiple mortgages together.
- Blanket Loan: Perfect for investors interested in financing several properties using one single loan.
- HELOC Loan: Allows a homeowner to pull equity out of an existing property to be used as a down payment for another.
- Hard Money Loan: Perfect for investors hoping to flip a fixer-upper.
Estimating Cash Flow for Investment Property Loans
As previously noted, investment property loans are pretty risky for lenders. Your lender may request to see a cash flow forecast to protect themselves. This document illustrates your projected income and expenses.
Your cash flow forecast should consider operating expenses, such as:
- Property taxes
- Capital expenditures
- Maintenance costs
- Leasing fees
- Property management fees
The forecast should also account for all the money generated by your rental property, minus vacancies. For example, assuming a 6% vacancy rate for a property generating $40,000 per year, you would lose $2,400 ($40,000 x .06 = $2,400). Thus, you can expect your gross cash flow to be $37,600.
Pros & Cons of Investment Property Loans
Let’s start on a high note. Investment property loans are perfect for enterprising borrowers who want to rake in some passive income. These mortgages allow you to purchase rental properties that, in addition to generating cash each month, will appreciate over time. An investment property loan can also be used to purchase a potentially profitable fixer-upper.
But every rose has its thorn. Chiefly, investment property loans are very hard to qualify for. Without stellar credit or lots of cash, you’re likely to be turned down by lenders. If you are approved, prepare for a slightly higher-than-average interest rate
Work With Dash to Secure an Investment Property Loan in Virginia
Are you feeling weak in the knees? We understand. Pumping your life savings into a ramshackle cottage or million-dollar quadplex can be unnerving. You’re probably worried that you’ll be turned down for an investment property loan or, if you do qualify, that you’ll be hitched to a crazy high APR3.
Fortunately, Dash Home Loans is here to ease your nerves. If you haven’t already picked up on this, we do mortgage lending differently. We’ve reimagined the entire lending process by firing inefficient loan processors and hiring a team of hard-working people who will actually remember your name. At Dash, our Mortgage Coaches are here for every step of your mortgage lending journey – from the house hunt to closing.
Get started with our Virginia loan professionals today by calling 757-280-1994.
Helping Homeowners Throughout Virginia
Apply for an Investment Property Loan With Dash Today
Do you still have some concerns about investment property loans? No worries. Give us a shout to connect with a friendly team member. Our Mortgage Coaches will gladly talk you through the pre-qualification process.
Ready to jump in? Great! Click “Apply now” below to start your application.
Virginia Investment Property Loan FAQs
Can I put less than 20% down on an investment property loan?
It’s highly unlikely. Though down payment requirements vary from lender to lender, most investment property mortgages require a down payment of 20% or more. The Federal National Mortgage Association allows borrowers to slide by with just 15% down on single-family investment properties, but 25% is needed for multifamily properties.
Can you get a 30-year loan on an investment property?
For sure. A 30-year loan term on an investment property mortgage is pretty standard. However, you can also opt for terms of 10, 15, 20, or 25 years. Just remember that a shorter term means a higher payment.
Are interest rates for investment property loans higher?
Yes. Interest rates for investment property mortgages are typically 0.25% to 0.75% higher than mortgages on standard mortgages. That’s because investors are more likely to default on secondary properties than primary residences. With this in mind, lenders increase the interest rate.
Is it hard to get a loan for an investment property?
Sometimes. Lenders are pretty picky when it comes to qualifying borrowers for investment property mortgages. To be eligible, you’ll need considerable cash, stellar credit, a low debt-to-income ratio, and consistent income.
1 Dash Loan Closing Guarantee Disclaimer: Guarantee is based on loan closing; restrictions apply.
2 No-Down-Payment Disclaimer: Closing costs and fees may still apply.
3 Lending Disclaimer: Mortgage rates are subject to change and are subject to borrower(s) qualification. APR rate(s) quoted is/are based upon a (loan amount), (loan term, including whether fixed or ARM) year.
4 Refinancing Disclaimer: When it comes to refinancing your home loan, you can generally reduce your monthly payment amount. However, your total finance charges may be greater over the life of your loan. Your PRMI loan professional will provide you with a comprehensive refinance comparison analysis to determine your total life loan savings.
5 VA Home Loan Disclaimer: VA home loan purchases have options for 0% down payment, no private mortgage insurance requirements, and competitive interest rates with specific qualification requirements. VA interest rate reduction loans (IRRRL) are only for veterans who currently have a VA loan – current loan rate restrictions apply, and limits to recoupment of costs and fees apply. VA cash-out refinances are available for veterans with or without current VA loans. Policies and guidelines may vary and are subject to the individual borrower(s) qualification. Program and lender overlays apply.
6 Down Payment Assistance Disclaimer: First lien interest rates may be higher when using a DPA second.
7 Pre-Approval Disclaimer: Pre-approvals are given to clients who have met qualifying approval criteria and specific loan requirements at the time of applications. Results may vary.
General Disclaimer: The content on this page has not been approved, reviewed, sponsored, or endorsed by any department or government agency.
NMLS® Consumer AccessSM: https://nmlsconsumeraccess.org/
Virginia-Bureau of Financial Institutions: MC-2248, Broker MC-2248, NMLS #3094
For refinance advertisements that state a reduction on monthly payment, please note: the total finance charges may be higher over the life of the loan.