Where to start with investment loans

[Frankie Azhocar]

Hi all, looking to get some advice on what type of loan i should be looking for to buy a rental to hold. This will be my first investment property and I just want to get some insight on loans. I know there's DSCRloans and Second home loans, but what would be the best option for a first time out of state investment and where should I start on the finance end? Budget range is $150,000-$250,000. I have the 20-25% down in cash, but not sure where to start on the applying for a loan end. Do I need a pre approval just like I did for my primary? If so, how long are they good for?  Any info is much appreciated. Thanks BP people!

[Reid Chauvin]

@Frankie Azhocar - You should begin by working a long-term lender who offers a variety of loan products, so that you can understand what your options are and what the financing costs will look like before you spend too much time house-hunting. A conventional loan is going to be option #1 (in my opinion) if you can qualify for it, and a DSCR loan would be option #2, just because the cost to borrow is generally higher with DSCR/Non-QM products.

The lender will be able to get you pre-approved just like for your primary. The biggest factor in how long a pre-approval is good for is volatility of rates - if they rise sharply then you likely won't be able to qualify for the same size loan as before. You generally don't need a pre-approval letter until you put an offer on a home anyway, and that's something your lender should be able to produce for you pretty quickly upon request. You'll want to work with a lender who is responsive and plugged in so that you are kept informed during your home search.