Full Rental asset Financing

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Rental property financing is regularly more costly and harder to get than quarterly property financing.

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Rates are higher, fees are higher, loan conditions stricter, prestige ratings higher, and other loan factors all add up to make it harder to investors to get mortgages on good terms.

Recently some mortgage lenders have begun to offer 100% financing to rental property borrowers.

This includes many distinct property types, including single family residences, condominiums, townhouses, and 1-4 unit properties.

Generally larger properties (5+ units) do not have 100% financing currently available. These types of properties regularly need a much larger down payment.

Advantages of 100% Financing

This type of financing allows the borrower to get the maximum inherent leverage on their real estate investment.

In this case the most a borrower needs to come up with is closing costs, which may be 1% - 2% of the loan amount. A borrower may also be able to have closing costs included in the loan as seeder toll - if the mortgage lender allows for this option.

An investor can use this type of leverage as part of a multi-step process. A real estate investor can buy a rental property with 100% financing and if the property increases in value use the added equity as leverage to refinance into a lower payment.

Check with the lender on the cost option types for this type of loan, how long the interest rate is fixed, and other relevant terms for you.