Finding a Real Estate Investor Loan

by Macha Me
(Baltimore, Maryland, USA)

Ask Kate about finding a real estate investor loan: Hello Kate, I am looking to buy a 2 unit dwelling as an investment property in Baltimore, MD. This will be my very first investment. I want to know types of mortgages I have at my disposal that will allow a very low downpayment.


Macha continues... I have very good credit and also can afford to invest 20 percent of my personal money towards the down for rental property.

But I'd rather not use my own money. I prefer to borrow most of the downpayment. Is FHA an option? What are my other options? Thanks again.

Kate Answers: Finding a Real Estate Investor Loan

Ask Kate at Get-Your-Best-Mortgage-Rate.com
Dear Macha,

FHA financing is the premiere choice among home buyers, owner occupied home buyers that is.

But even though you plan to buy a duplex, you may still be able to take advantage of FHA home loans.

Low Downpayment FHA Mortgage Loans

For home buyers who plan on living in one side of the duplex (no less than one year) and renting the other unit, FHA mortgage loans offer a low downpayment option.

But if your intention is to rent out both sides of the duplex, you have one less option.

Conventional Investor Mortgages

Since investor mortgages, especially on multi-units, have historically ranked at the top of the list for foreclosures, a low down conventional mortgage may be more difficult to obtain as an investor, right now.

The issue with low downpayments for nonowner occupied loans is that the properties do not cash flow very well. But this may be an acceptable trade-off to you. Even so, read Real Estate Investor Loans to keep your eyes wide open.

Private Money Lenders

Of course, another option is with family members looking for a better return than banks can give right now. You may have a relative interested in offering you private mortgage financing to purchase the duplex.

Short Sale & Foreclosure Properties

Even with a plentiful supply of short sale and foreclosure properties on the market, investors still need help financing their purchases, in your case a duplex.

I have a suggestion!

I would interview three real estate agents experienced in listing and selling duplexes. Since Realtors are in contact with local and nationwide mortgage lenders, you may find your best source of money by asking for a referral.

And don't forget to check my Mortgage Lender Directory at List of Mortgage Companies in Maryland.

One more thing. I'd like to hear back from you. Let me know if this page is helpful to you.

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Macha's question
by: Mario

Kate, You're right about Macha's options for investment financing dwindling down to Conventional. FHA does however allow a borrower to live in one unit and rent out the other unit. FHA even takes into account the income on the market value of the 2nd unit rental.

The appraiser puts it on the FHA appraisal and the underwriter allows up to 75% of the rental as income. If Macha is going to live in one of the units and rent out the other than FHA is definitely the financing I would choose especially since she wants to have a low down payment.

My cell is 240-353-5102 if Macha would like to contact me for further FHA home loan information.

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