Single Rental Loan

If you’re planning to invest in rental property, you have the option of a single-family rental or multi-family units.

Obtaining a mortgage will have similarities and differences, depending on which path you choose, and it’s important to understand those differences before commencing to make the loan process as straightforward as possible.

The Differences in Multi-Family Rentals

A single-family residence is a property that houses only one family; for example, a detached house is a single-family property.

Multi-family properties are more complicated, and for financing purposes, they are broken down into residential and commercial properties.

 

Financing for Residential Multi-Family Properties

Financing a property with four or fewer units is considered a residential loan, and it operates much the same as a single-family property purchased for a rental unit.

If you plan to live in one of the units and rent out the others, you can apply for an FHA loan.

You’ll likely have a large cash reserve requirement and may be limited to how much of the rental income can be included in the income qualification. The benefit of this loan is a lower down payment with only 3.5 percent required.

If you don’t plan to live in any of the units, you’ll need to seek out a conventional residential loan; regardless of whether you want to purchase a single-family property or multi-family home.

Your credit score is a significant factor when purchasing rental properties, just as if you were buying your own personal residence.

Click here to see if you qualify for a Single Rental Loan.