What is Investment Property Loan?
An investment property loan is a mortgage for a property the borrower does not occupy, typically used to generate rental income or appreciation.
An investment property loan finances a real estate purchase that the borrower does not live in. Borrowers meet it when buying rental properties or second homes. Lenders view these loans as higher risk, so they often require larger down payments, higher credit scores, and reserves. Watch for higher interest rates and stricter debt-to-income limits. Rental income may be used to qualify, but documentation requirements are detailed. Some loan programs, like DSCR loans, focus on the property's income rather than the borrower's personal income.
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