Real Estate Investment Loans

At Compass Mortgage, we attest to the possibilities real estate offers as a component of a diversified investment portfolio. Because we are a mortgage banker, we understand both the opportunities and the challenges in the real estate market, and we strive to help our clients maximize their earnings from the resources they invest in property.

What is a Real Estate Investment Loan?

A real estate investment loan is a type of financing specifically designed to help you purchase land and buildings for the purpose of generating income or appreciation. Unlike a traditional mortgage for your primary residence, real estate investment loans are used for properties which the owner does not occupy.

Real estate investment loans help make it possible to finance . . .

• Income-producing property. Included would be single-family homes, multi-unit buildings such as duplexes, triplexes, up to larger apartment buildings or commercial properties from which you plan to earn rental income.
• Fix-and-flip projects. Included would be properties which you would purchase, renovate, then sell for profit.

There are several loan options to help make your real estate investment dream a reality, and they fall under two categories:

1. Conventional financing: Available for properties which are comprised of 1 to 4 units. There is a variety of loan programs in this category; and they typically offer fixed interest rates with 30-year, 20-year or 15-year terms (or lengths of mortgage), depending on specific qualifications.
2. Commercial financing: Available for properties with 5 or more units. Again, loan programs vary for these buildings but can be adjustable-rate mortgages (ARMs) or fixed-rate mortgages (FRMs) with 15-year terms, depending on specific qualifications.

How to Qualify for a Real Estate Investment Loan

Contact one of our Compass Mortgage loan officers to find out more about financing a real estate investment! We can help you think through the benefits and risks for this type of investing, as well as the need to choose property which represents something you would be wise to commit to.

We’ll also help you decide which type of mortgage loan will best suit your needs and, if you avail yourself of our unique Get Committed® program, we can lock in an interest rate for your loan along with a fully underwritten loan commitment which will enable you to make a winning offer to the seller of the property in which you wish to invest.

First Steps toward Obtaining Your Real Estate Investment Loan

Potential investors often begin by requesting a quote for an interest rate or by beginning an application with us at Compass Mortgage. Once you’ve identified a property which you would like to purchase and provided us with basic information about it, we’ll work with you to access your credit report, discuss your finances and assess the market value of the property you wish to buy.

We will inform you about the documents you will need to provide, calculate how much you can borrow for the purchase and help establish the terms and conditions of the mortgage loan you will acquire.

Real Estate Investment Loan Requirements

1. Credit score: 600-700s. (One component of overall creditworthiness)
2. Debt-to-Income ratio (DTI): Below 43%. (DTI represents the percentage of your income committed to debt payment.)
3. Down payment: As little as 5% of the purchase price of the property
4. Needed documents: Proof of identity (e.g., a state-issued driver’s license), verification of employment and income, statements showing assets, proof of reserved funds
5. Property appraisal: Professionally-expedited appraisal
6. Business plan: Your strategy (to promote the property, sustain occupancy and so on), potential income, projected expenses, approach to property management
7. Previous property investment experience: Not indispensable, but possibly helpful for loan approval