Thinking about purchasing your next rental property but overwhelmed by the number of loan programs available and which one is the best fit for you? We’ve got you covered. When it comes to loan programs, there are essentially two giant umbrellas: government sponsored and private label loans. Some programs are available for both consumers/owner-occupiers and investors/business purposes, others for one or the other.
Let’s look at government sponsored loans first. For owner occupiers, there are conforming loans, FHA loans, USDA loans, and VA loans. Conforming loans meet the criteria established by Fannie Mae and Freddie Mac. FHA, USDA and VA loans are special programs for low income families, rural development, and veterans, respectively.
Government sponsored loan programs for investors include 203k loans, which are tailored to construction projects, and conforming loans. All government loan programs are known for their low rates, yet have strict qualification guidelines. If you want to see if you will qualify for a government loan program for your next rental property, see our blog post Should You Conform?
The private label loans have much more flexible guidelines than government loans, yet tend to be more expensive. For owner occupiers, there are jumbo loans and non-qualified mortgages. A jumbo loan has a loan amount that exceeds the limit established by the Federal Housing Finance Agency (Fannie and Freddie’s regulator). The 2017 limit is $424,100 (and it will increase to $453,100 for 2018). A non-qualified mortgage is any home loan that doesn’t comply with the Consumer Financial Protection Bureau’s (CFPB) guidelines.
There are a variety of private label loan programs for investors. Whether you are looking to purchase a rental property, renovate a property, or build new construction, the private sector has flexible guidelines for the needs of investors.
Want to learn more? Check out our graph on SFR Loan Programs.