Nationwide Non-Owner Occupied Investment Property Financing 2022

In 2022 the landscape of investment property financing is changing. Some lenders are not able to lend as much money or have stricter terms than before. We find longer term financing of rental properties of 1-4 units & 5-8 units landing under commercial lending is getting more resistance to financing in these trying times despite rental demand increasing. Moreover, we do have an option for financing 30 or 40 years fixed term fully amortized over 30 years amortization or option to go interest only with lower monthly mortgage payment for the first 10 years before loan converts to fully amortized. The longer the loan term the more risky loan is for lenders therefore, rates tend to be higher than ARM loans specifically 5 or 7 years ARM's seem to be favored by lenders. 1-4 units properties tend to amortize over 30 years amortization table however 5-8 unit commercial properties tend to use 25 years amortization table using ARM's. Commercial related properties 5-8 units borrowers do need to show rental property experience otherwise it will be more challenging to do or borrower being a risk to lender needs more money for down payment or lower loan to value. These loans don't require income verification, however, require anywhere between 25-40% down payment in most cases using rental assessment. Rental assessment a.k.a. debt coverage service ratio (DSCR) making sure borrowers mortgage payment PITIA/management cost does not exceed monthly rental income and borrowers are not cash flow negative. In case borrower is cash flow negative they will need to increase their down payment or lower loan to value so they are 1 to 1 mortgage vs rent at minimum, most cases 1.10 to 1.25 debt service coverage ratio in order for borrower to be cash flow positive. This type of financing will have pre-payment penalty depending on duration of loan specific loan guidelines anywhere between 3-7 years and some cases borrower can buy down pre-payment penalty terms. For more information you can contact us.