What can I do to get the best mortgage for a rental?

Jane,Great questions, when it comes to investment properties or a second home the interests rates are a little bit higher than if it were to be owner occupied. Yes you can use the equity in your current home as a down payment to purchase another property this is an opportunity that is exercised quite often. As far as credit goes, it will definatly determine what your interest rate will be so yes better credit in most cases will equal better rates. I hope this helps. Marcus

The short answers are A) Possibly, it depends upon your current FICO scoreB) No - your future tenant will have no bearing on your ability to qualify unless you were to make them a co-signor and why would you do that, right?C) No - but you can use that equity to get a cash out refinance to get the cash for a larger down payment. Non owner occupied mortgages do require larger down payments and the rates are somewhat higher than owner occupied mortgages. In the end, if you can rent a home at break even or positive cash flow, all things considered, you will see a decent return over the long term. I can be reached at 347-RON-BORG (766-2764) if you would like more assistance.

As a general rule, Lenders will charge you a higher rate of interest on an investment property loan than they would for one you live in. A lender is not interested in the credit/income quality of your potential renter, because the renter is not making the payments, you are. Because of this, they will not consider the potential rental income when determining if you can afford the payments. FInallly, If you own your home free and clear, then you can consider cashing out the equity and paying cash for the new rental, or increasing the size of the down payment. As far as putting your own home up as additional collateral for the purchase of the investment property, No. Traditional lenders will not consider the pledge of your current home in addition to the home you are purchasing as collateral for one loan.

Your credit does need to be better if your purchasing an investment vs owner occupied. The person you rent to has no influence on whether the lender will lend to you or not... You cannot collateralize your home against the new property... at least not conventionally (Hard money, Yes...), but in either case, it wont change the interest rate... You don't want to cash out your primary to finance an investment... the write offs associated with rental property far out weight those on your primary... WilliamAcres.com

Hi Jane - Investment property loans usually have higher down payments and need higher than average scores. If you have a lender, they should be able to walk you through all of these questions so that you know EXACTLY what you need in way of score and down payment. If you don't have a lender, feel free to call me and I can help you do a prequalification. My direct line is 208-321-4310. I know that there are a few small banks that will portfolio their loans and where they will cross collateralize other property but those are few and far between. Let me know if I can answer any other questions for you.