Can I Get a Mortgage Loan to Buy a House for Rental? Even if I Don’t Plan to Live in It?

Yes, you can definitely obtain a mortgage loan to purchase a house with the intention of renting it out, even if you currently live in an apartment and do not plan to move into the rental property. This type of mortgage is commonly referred to as an investment property mortgage. Modern lenders are open to considering investment mortgages, as long as you meet their specific requirements.

Loan Types and Requirements

The most significant factor in obtaining an investment property mortgage is to apply for a loan specifically designed for such properties. Here are some key points to consider:

Loan Type: Choose a mortgage product tailored to investment purposes. These loans often have higher interest rates and larger down payment requirements when compared to those for primary residences. Down Payment: Lenders commonly require a higher down payment for investment properties. The typical range is between 20% to 30% of the purchase price. Credit Score: Your credit score plays a vital role in securing an investment property mortgage. Lenders often prefer scores of 700 or above. Rental Income: Lenders may consider the potential rental income from the property, which can positively impact your mortgage application by qualifying you for a larger loan amount. Debt-to-Income Ratio: Your overall debt-to-income ratio will be evaluated. Lenders want to ensure you can manage the mortgage payments even if the property is not yet rented out. Property Management: If you are not planning to manage the property yourself, consider how you will handle property maintenance, repairs, and tenant relations. Professional management can be a good option. Local Regulations: Familiarize yourself with local laws and regulations regarding rental properties, including zoning laws, landlord-tenant laws, and any rental licensing requirements.

Additional Considerations and Tips

If you decide to pursue an investment property mortgage, it is crucial to be upfront with the lender about your intentions. Do not claim that the house will be your primary residence. Lenders may view this as misrepresentation and could refuse the loan application.

Getting Professional Advice

To navigate the complexities of obtaining a mortgage for an investment property, it is advisable to speak with a mortgage broker or lender. They can help you understand your specific options and requirements based on your financial situation and the property you intend to purchase. This professional guidance will undoubtedly increase your chances of securing the mortgage smoothly and successfully.