Rental Properties Question.
I am interested in buying a few rental properties, my question is how do you qualify for a loan on a rental property if you already own a home? Does the property have to be occupied at the time you apply for the loan? Do you get these loans from a bank, or a mortgage company? Please help.
Need a little more information how much are the properties?
Each lending institution will have a different set of qualification guidelines. If you are after a conventional loan, then in my opinion is doesn't matter if you use a bank or a mortgage broker, although there are agruments for using a broker.
The property does not have to be occupied, although that will help. The lender will most likely look at your debt to income ratio. Basically, if your debt to income ratio is sufficient and you have the funds for the down payment/closing costs, you should be able to qualify.
Note that after your first property is under your belt and you have rental income history, the rental income will be included in the debt to income computation (usually the lending institution counts 75% of your rent income towards the debt to income ratio) So, keep in mind that after the first one is under your belt, they'll get easier and easier!
Note also that each institution is different. You should start calling around, and find what different guidelines they all have.
Having the units occupied helps because the income from the units is taken into account when considering your loan. I have had lenders ask for copies of rental agreements or rent checks.
I am not sure of the significance of your question about owning a home. Loan to Value ration of all of your RE holdings will be considered. You might clarify your concern.
What I had to do was re-fi my current home at the time into a investment property. Then after a few months I found a primary home I wanted to buy and live in. To qualified for the loan on that, they wanted a signed lease (doesn't have to be occupied at the time if you know what I mean) for my current residence I was moving out of.
My lender had a formula of the 9/12 rule. They take the mortage of your investment property * 12 plus or minus 9 months of rental income and add that to your debt/income ratio. The remaining 3 months to the lender is a fail-safe way of saying on average you won't have tenents 3 months out of the year.
Again, like others said. different lenders have different guidelines. I just called a few, and picked the lender that impressed me most and stuck with it.
Hope this helps.
Paul