Is interest rate on a conventional loan at 7.6%?

Question

I do not know much about lenders and brokers and how much rates vary between them. I called my local lender brokerage here in town and I asked what the going interest rate was for a conventional loan for a duplex (not owner occupied). He said that it was around 7.6% interest and 25% down. Does this seem in line with the market? I'm second guessing because I saw another post on here referencing 5%-6%.

Michael Dumler · Answer

@Travis Reed, 5%-6% is more in line with owner-occupied conventional loan products at the moment. Moreover, your rate also depends on your financial profile; credit score, DTI, tax returns, etc. As always, shop around with multiple lenders and have them compete for your business.

Dave Skow · Answer

@Travis Reed- thanks -  non owner   2 plex 30 yr fixed  rates  definitely over  7%

Jay Hurst · Answer

@Travis Reed   The rate is just one piece of the puzzle. The rate might be ok, or it might be terrible depending on your credit score and also how much in points/discount/fees that quote is coming with.  The 25% down is required for all 2-4 unit non-owner occupied conventional loan. So, that will be the same no matter who the lender is. This is coming directly from Fannie Mae's website     Fannie loan to value chart

There are some options non conventional options that would only require 20% or even 15% however, the rates are higher and rarely worth the lower down payment.

Zach Wain · Answer

Rates are higher again today!  They change every single day, just like the stock market.  Tomorrow, they will be different again.  Today, a primary home 30 yr fixed is around 7%, so a rental will be much higher and have high fees

Reid Chauvin · Answer

@Travis Reed - Fannie Mae and Freddie Mac (they purchase and securitize the bulk of conventional loans and dictate lending guidelines) implement loan level price adjustments, where different types of loans carry different pricing. A 5% down, 1-unit, owner-occupied home where the borrower has a 780 credit score may garner a 6.125% interest rate, whereas an investor putting 25% down, with the same credit score, buying the same home may have a 7.5% interest rate because of the pricing adjustments for non-owner occupied. Despite what people on here may think or say, conventional loan rates do not vary THAT much from lender to lender. Conventional loan rates are driven by Mortgage Bond trading, and most lenders are selling their mortgages to the same mortgage investors. With that said, one lender might take a lesser margin than another lender so that they can price lower rates, but we may be talking like .25% - .5% difference in rates, if that. This in turn results in less money to pay their processing staff btw. To make things even more fun, some lenders price discount points (additional upfront fees) into the rates that are quoted without clearly disclosing that to you, AND rates can also fluctuate throughout the day. If you were quoted two weeks ago, chances are that rate is no longer attainable at the moment.

Nathan Grabau · Answer

This is the correct range for an investment property conventional loan. I expect 30 year owner occupied rates plus 1.5% for conventional investment loans. Historically I have been able to find local banks that are able to beat conventional rates for investments, but secondary financing markets are currently struggling.

Chris Webb · Answer

I was just quoted at 7.5% and 8.15% for investor loans, 25 down.

Michael Magno · Answer

Low 7's and high 6's are the best I am seeing.  I do have a local to me Portfolio lender who recently quoted, 5.875 to one of my clients. Happy hunting.

Zach Wain · Answer

Ya that rate is legit, and a DSCR loan with a 3-5 yr Prepayment penalty vs a conventional loan, I will take conventional all day.  If you can get conventional, do it.  When you want to refi in a year or two you will be kicking yourself with a DSCR loan with a heavy PPP.

The good news on the recent conventional LLPA changes (very little good news, but) is they lowered the price hits for 2-4 unit homes going forward.  Conventional should win

Lyndsay Zwirlein · Answer

The investment (non owner occ) conventional loans have been around that for months at 85% LTV. More money down (like 25%) should lower the rate. Also agree with everyone else that DSCR rates are better than that with 25% LTV (depending on your FICO). I'd definitely shop around!

Is interest rate on a conventional loan at 7.6%?

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