Investment Loan vs. Owner Occupied Loan - Approval Process?

3 Replies

Hi All,

I am considering taking a job that pays quite a bit less than my current job but would be a good long term move for my RE career. I am hoping to purchase my second triplex soon. I probably will not be able to approve for the deal size that I want using residential financing, therefore I am interested in using an investment loan. Can someone tell me the difference in approval process by purchasing a property using an investment loan vs a home loan (owner occupied)? My goal would be to buy a property with below market rents in a nice area, fix it up, then lease it up at market rents.

With an investment loan does the lender still look at your personal DTI? Or does the lender look at the CF of the property (would be weak since I'm buying a property with low rents)?

Thank you,

Lance

@Lance Knapp what do you mean by investment loan? Do you simply mean a residential (Frannie or Freddie) for a non owner occupied property?

If that’s the case the approval process is basically the same from my understanding, with the terms a bit different (slightly higher interest rate, more money down)

Originally posted by @Caleb Heimsoth :

Lance Knapp what do you mean by investment loan? Do you simply mean a residential (Frannie or Freddie) for a non owner occupied property?

If that’s the case the approval process is basically the same from my understanding, with the terms a bit different (slightly higher interest rate, more money down)

Caleb, I mean exactly that. A non owner occupied property that is a triplex or fourplex. I think you are right.. That is what I was fearing. I guess the difference in underwriting the non owner occupied is you can account for rents from all of the units with no vacant owner unit. Higher interest rate and higher down payment ... I will look to stay in the owner occupied range then.

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