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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.

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.

Apply for an investment property loan

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Contents

• 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

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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:

• Condos
• Apartments
• 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.

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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.

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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.

Apply now

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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:

• Insurance
• 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.

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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

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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.