Loan pricing & qualifying is more complicated than ever before. It depends on credit score and equity to start with.
If you are looking for a 30 YR fixed loan, in most cases a BANK is a mortgage broker. They do not make their own rules. Loans are underwritten to Fannie/Freddie guidelines and sold off to them immediately, even if the bank retains the servicing rights. You may or may not get a better deal from a mortgage broker, if that is what you are looking for.
The best pricing for rental property requires a mid credit score of 740 or above and at least 25% equity. (It makes no difference if you have 75% equity) the pricing hit is 1.75% of the loan amount. You can either pay the 1.75% up front and get a lower rate OR get a rate that is .25-.375% higher, fixed for 30 yrs. With 20% equity it’s a 3.00% hit. Fannie/Freddie will not finance rental purchases with less than 20% down.
All depends on your expected time frame of owning the property as to what makes sense. The cost to get the rate moves around a bit every single business day, based on the bond markets.
2-4 units cost more than single family homes. Condos and townhomes can be MUCH more difficult to finance(or impossible)
Today, 5.00% is available for rentals with less than a point or 5.125% without points. By paying the 1.75% hit and points you can get down to 4.625% IF you qualify. It’s not as simple as most people think.
Income and assets are another piece of the puzzle.
Owner occupied properties get better pricing.
..HLS
