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Purchasing investment property is a great option for investing your money. However, getting a mortgage for such a purchase is quite different than getting a loan for a primary residence.

Qualifying for a Real Estate Investor Loan

Compared to getting a loan for a home that is occupied by you (the owner), qualifying for a real estate investor loan requires a few more steps. This is due to the fact that most lenders consider this type of loan to pose a higher risk.

For this reason, if you’re hoping to invest in real estate, it’s important to understand that the eligibility requirements tend to be more stringent and the process may cost you more than your typical home loan.

If you want to qualify for an investment loan, it’s going to take some forward thinking and intensive planning on your part. There are a number of things lenders will look at before even considering approving such a loan.

Debt-to-Income Ratio

The lender will take your debt-to-income ratio into consideration, which is a comparison of your total monthly income to the debt payments you are obligated to make on a monthly basis. The better your debt-to-income ratio is, the easier it will be to get your investor loan.

Credit Score

If you’re an investor looking to borrow money for a rental property purchase, then undoubtedly lenders will be looking for credit scores on the higher end. Generally, you’ll need a credit score of 620 or above.

Income and Tax Returns

Just as with a traditional home loan, banks will take a close look at your pay statements and previous years’ tax returns. This will give them a picture of your overall annual income to determine whether you can afford the loan. If you’re looking to buy an investment property, lenders will expect you to have an income that supports that endeavor. If you have experience being a landlord, you can use existing tenant rent as income.

Job Consistency

Lenders will also require that borrowers demonstrate that they have been in their job consistently—usually, it’s ideal for a borrower to have been in the same job for at least two years. Depending on the bank, they can also take into consideration real estate investment hopefuls that switch jobs but remain in the same line of work.

If you’re looking for a loan consultant in Tacoma, Seattle, Bellevue, or other regions of Washington State, then TILA Mortgage is your answer. They can assess your individual case and help you get qualified for a real estate investor loan. Contact them at (206) 823-1442 and get the process started right away!

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*TILA Mortgage is not financial service company or licensed tax advisors; the material provided is for informational and educational purposes only and should not be construed as investment, tax and/or mortgage advice. Although the material is deemed to be accurate and reliable, there is no guarantee it is without errors. We are not financial or tax advisors, please contact your financial professional for your personal financial situation.