Everything You Need to Know About Rental Property Loans

December 10, 2021

Once you read this, you’ll become a rental property loan expert!

If you are thinking about dipping your toe (or foot or entire body) into the rental property pool, you’ve probably read, heard, or seen the term “rental property loan.”

Rental property loan?” you may have thought. “What do those words even mean?”

We got you, boo.

First things first, let’s answer the question, “What is a rental property loan?” Great question, glad you asked. Also known as an investment property loan, a rental property loan is a first lien mortgage loan (aka, a loan secured with real estate as collateral) secured by an SFR (aka, “single family residence”) that is occupied by a tenant rather than an owner.

When done properly, getting that rental property loan, buying your desired real estate, then renting out that desired real estate is a great way to generate a passive income stream that can help you from now until retirement, not to mention that that rental property diversifies your investment portfolio and creates an asset that grows in value over time.

So, you’ve made the decision to invest in rental properties, you’re comfortable in the role of landlord, and you’ve even picked out some real estate that you are considering purchasing. Good for you! But guess what? You’ve only just begun because now you’ve got to start the process of getting that rental property loan….

And here’s everything you need to know about getting it.

The good news is that rather than a conventional loan where money lenders pour over your tax information, a rental property loan is approved based on the value of the rental property or the rental income of the property. The approval process of rental property loans tends to be a little quicker as well, which is perfect if you’ve found the ideal rental property and wanna jump on it quick.

A rental property typically needs to fit into one of the following categories:



*Single-Family Unit

*Multi-Family Unit

Generally, you’ll need to stick with one to four-unit properties when you apply for a rental property loan. If you want to buy an investment property with more than four units, you might need to consider a commercial residential loan or an apartment loan as an alternative. (But let’s not go there, shall we?)

Now, a rental property loan has slightly different parameters than a home mortgage loan — it’s not “one size fits all,” ya know? With a rental property loan, you typically have more of a down payment to make, as well as higher interested rates attached to the loan. Why’s that? Well, when it comes to approving a mortgage on a rental property, lenders are a little more stringent in their requirements. Because the owner will not be occupying the property, potentially transient occupants may adversely impact the property’s value, making the risk for the lender much greater, hence, the bigger down payment and higher interest rates.

All of this means that when you are finally ready to apply for a rental property loan, you’ll want to be prepared. The better you look (on paper we mean…you’re beautiful IRL), the better your chances are for getting approved. This means:

*making sure your credit score is on point (640 or higher).

*making sure you can make a down payment of at least 20%.

*making sure you have a six-month cash reserve of mortgage payments.

*making sure you pay off as much existing debt as you can.

*making sure all your paperwork is in order.

Of course, one of the most important decisions when looking to get a rental property loan is finding the money lender that is right for you. You want to find someone who is willing to work with you and your specific needs. That’s where The Loan Guys come in. The Loan Guys have a rental property loan program that makes it easy for real estate investors to acquire their rental property quickly… like, 12-14 days quickly. They also offer…

*Up to 80% Loan-to-value on single-family residence, 2-4 units, condos, and townhomes.

*Purchase, refinance, or cash out options available.

*Minimum credit score of 640+ for 1-4 units and condos.

*Loan term 30 years fixed/fully amortized.

*Hybrid ARM options available, 5/1, 7/1, 10/1 Amortized over 30 years.

*10-year interest only option!

*20% down payment required.

*Blanket Loans available.

*NO income verification required.

*NO DSCR option available!

We know that it may seem like a lot when considering getting into the rental property game, and it can seem kind of confusing at first. So, if you have any questions or concerns (literally, ANY), reach out to The Loan Guys and they’ll be happy to walk you through the rental property loan process.

Seriously, they live for this stuff.

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8/4/23 9:50 pm


8/4/23 9:50 pm