Living in Florida is great, but owning an investment property is even better. After all, in this case, you not only buy a house, but you can also receive stable passive income by renting it out. However, this idea has one drawback — as a rule, getting a loan for investment real estate is much more difficult. You can expect higher interest rates and strict down payment requirements. Let’s figure out how an investment property loan in Florida works and what you should prepare for to achieve your financial goals.
Requirements for investment property loan in Florida
Investment properties are considered riskier but have high potential and profitability. Of course, even experienced investors can encounter setbacks. But on the other hand, you won’t achieve financial success if you don’t take action. So, to qualify for an investment loan, borrowers must meet specific requirements.
The down payment is one of the most critical parameters. The terms of your loan, interest rate, and monthly payments depend on it. As is correct, for investment real estate, the down payment is 20-25% of the loan amount.
- Rental income proof — the lender wants to ensure that the borrower can actually receive income from rental property. Therefore, you should draw up a solid business plan with a detailed analysis of potential rental income. Also, this plan should include the cost of repairs, maintenance, and property management fees.
- Credit history — each lender has its own requirements, but most often, a credit score must be at least 640. Therefore, consider this parameter and prepare for receiving a loan in advance — this way, you will have time to improve your score.
- Cash Reserves — be prepared that some lenders may ask for reserves for 6-12 months of mortgage payments.
How to get started with an investment property loan in Florida
Investing in real estate is a wise action to ensure a prosperous future. But, on the way to buying an investment property, it is essential to plan everything 100% to close the deal.
Contact LBC Mortgage for a free consultation and gain access to the best deals in the Florida market. We understand how important a decision it is to get a loan, so we make the process as smooth and simple as possible. Our experts will accompany you at all stages, from application to closing, so you can always get support and ask questions.
Types of Investment Property Loans in Florida
If you are looking to purchase investment property in Florida, here are some of the most popular loan programs:
- Conventional loans are the only standard program that allows one to purchase an investment property without specific requirements.
- If you’re looking to invest in a multi-unit property, FHA loans can be a great option. They provide the flexibility to rent out extra units while also allowing you to occupy one for at least a year, allowing you to generate rental income and build equity simultaneously.
- Non-qualified mortgage loans are available for borrowers who don’t meet the requirements of other programs.
- Owner financing may also be an option, where the seller agrees to act as a lender and provides temporary financing in exchange for a large down payment.
- Those who have already accumulated significant equity in their homes may access home equity loans and lines of credit.
- A cash-out refinance allows you to take out a mortgage for more than you owe and use the difference to buy an investment property.
Rates for investment property loans
As written above, investment properties pose a lot of risk to investors, so rates are also adjusted depending on the potential risk of the transaction. However, do not rush to be disappointed — the rate may be affected by the type of property, your credit history, the amount of the down payment, and even previous investment experience. Therefore, it is essential to obtain a mortgage with an experienced professional who will help you make a good deal.
Apply for an investment property loan in Florida
Get your investment property loan with LBC Mortgage! Our team of experts is intimately familiar with the Sunshine State market and will help you obtain financing on the most favorable terms.
Contact us today to discuss investment property loan options in Florida and take the first step toward building your real estate portfolio.