Can I get a second mortgage to invest?

Question

Hello,

I'm hoping some can help me. I'm new to this, very passionate and looking forward to investing.

I currently live in Colorado Springs and wanting to purchase my second house. My doubt is, as I already have a mortgage with a VA loan for my primary home will this affect trying to go for a second one directed to investment only.

I have a good credit, but not sure what type of loan would be the best and how much would I be accepted for considering I have a first mortgage.

Your help is much appreciated.

ThanksTammy

James Carlson · Answer

@Tammy Price

Talking to a lender is the best first step. They can run through the options based on your specific situation. That said, yes, you should theoretically be able to do this. My wife and I used a HELOC on our first primary residence for a portion of the down payment on our first rental. We now own two rentals.

What are you looking to do with this purchase? Traditional long-term buy-and-hold? I have some clients under contract in the Springs who are going to do Airbnb with it. The laws down there are very favorable.

Good luck!

Jared Bouzek · Answer

@Tammy Price The answer to your question is that is comes down to individual factors in your situation. The good news is that you should be able to count the rental income from your purchase, so that income can be used to help your debt to income ratio. You really just need to have a lender sit down and look at your qualifying factors to give you that answer.

If your question was specifically about if you can use a VA loan to purchase an investment property, the answer is no because a VA loan can only be used for a primary residence. You could use a Conventional loan if you are looking to buy an investment property.

Tammy Price · Answer

Thank you all for you answers and quick respond! They have been very helpful!

Knowing that a lender will take in to account the rental income from purchase puts me at ease. I'm happy there are more that just one way to get the ball rolling financially for my second future property.

@James Carlson

I'd love to keep the second property and rent or Airbnb it, my idea is to create passive income and not have to think of paying the mortgage myself.  I'm also interested in flipping if there is a good deal out there.

If I kept the property to rent and let it pay for itself, I quick could I finance a third house, or is this not possible?

If not would flipping be a better option for me?

Thanks

Phillip Bicker · Answer

@Tammy Price Yes, you can get a second mortgage to invest.

One option for you would be to use a conventional loan at 25-30% down on the investment property and simply get the down payment from a Line of Credit or second mortgage on your current home. If you have enough equity in your current home to cover the full purchase of the new home via 2nd or HELOC, you could do that as well (although I might recommend putting down about 30% and then seeing if you can buy another property as well). Just like was mentioned earlier, most mortgage brokers/banks will allow you to use rent from the new property to qualify for the loan, even if it is not currently rented, so the biggest issue is coming up with the down payment funds.

Can I get a second mortgage to invest?

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