Best Mortgage Lenders for Investment Property Mortgages (including non-QM)

An investment property loan can be advantageous if you want to purchase a fixer-upper to resell for a profit or rent out a home to earn additional income. Investment property loans allow investors to maximize their earnings by utilizing the down payment, the duration of the repayment terms, and the interest rate. In addition, investors can increase their returns by using investment loans to build in areas with a demand for reasonably priced rental homes.

However, you will need to fulfill more stringent qualification requirements or discover the top lenders with the most inexpensive rates because investment property mortgage rates are often more significant than those you pay for a permanent residence. You may choose the best mortgage for your real estate investment objectives by being aware of the leading mortgage providers.

Due to the borrowers’ inability to make mortgage payments, many mortgages entered default more than a decade ago. Although many mortgages initially assisted borrowers in purchasing homes, ultimately placing those homeowners in a precarious financial condition, they are mainly to blame for the rise in defaults. As a result, non-QM lenders have modified their services to provide secure alternative lending options.

This article will examine the primary non-QM lenders and the leading mortgage servicers, from your neighborhood bank to fintech startups. It will compare their rates and conditions with support and financial stability to create a complete picture of what you may anticipate as a borrower.

The choices are based on the properties they can be used for, the amount of down payment needed, the current interest rates and annual percentage rates, the minimum and maximum loan sizes, and the length and complexity of the underwriting procedure. Here are some of our favorites. 

Who are the best lenders for Investment Property Mortgage loans and Non-QM loans?

Quicken Loans

Quicken Loans was established in 1985 as a brick-and-mortar lender before going online between 1999 and 2001 as Rocket Loans, coinciding with the expansion of the internet.

When you finish their online application, they provide a sizable selection of loan packages you can customize to your needs.

In addition to offering jumbo loans for more expensive homes, Quicken Loans also provides fixed- and adjustable-rate home loans, mortgage refinancing, FHA, USDA, and VA loans, as well as lending on residential and multi-unit investment properties.

If you meet the requirements for their agency loans, Quicken will offer you down payments on conventional loans as little as 3%. However, you will need to pay private mortgage insurance if your down payment is less than 20%.

The current 30-Year Fixed Rate mortgage carries a rate of 5.25% and an APR of 5.537%. The rate is 4.625%, with an annual rate of 5.104%, for their 15-Year Fixed Loan product.

Remember that, according to Fannie Mae standards, you can only obtain up to 10 conventional mortgages with these attractive rates and downpayment possibilities. Once you’ve reached that limit, you’ll need to use alternative bank financing sources like private equity and hard money lenders.

The minimum loan amount varies by property type, but the highest amount under their jumbo loan program is $2.5 million. In addition, quicken Loans now uses Rocket Mortgage as its web platform and loan processor.

We determined that Quicken Loans was the best overall investment property lender because they offer a wide range of loan types, lend nationally, and make it very simple for borrowers to apply for a mortgage online. Additionally, Quicken offers competitive rates, which supports its status as the top mortgage provider overall.

Veterans United Home Loans

Veterans United, a full-service lender established in 2002, focuses on VA loans for eligible veterans, active duty personnel, and their spouses. In terms of volume, they are among the biggest VA mortgage lenders in the country.

Flexible qualification requirements, reduced rates, monthly payments, no down payments, and a lack of private mortgage insurance are advantageous to investors. In addition, Veterans United understands how to make the VA loan work for an investor while adhering to the program’s rules and offering VA loans as low as 0% down.

Fixed and adjustable-rate mortgages, jumbo loans, refinance loans, and cash-out loans are some of the products available. Depending on the loan package, lending rates range from 4.625% to 5.5%, with APRs between 4.991% and 6.117%. There is no announced minimum loan amount at Veterans United. If the investor uses a VA loan, the VA will only provide a guarantee up to the county-specific loan cap. For loans funding one unit, the maximum county limit is $647,200, but in some high-cost locations, it can go as high as $970,800.

Veterans United reviews the property inspection reports, appraisal, and title search results as part of the loan underwriting process. They do this by looking at your credit score, debt-to-income ratio, cash reserves, and income. From start to completion, allow 40 to 50 days for the closing. After that, the initial pre-approval stage is essentially finished online. A copy of your driver’s license or another form of government identification, a copy of your DD-214 or Reserve/Guard points statements, a statement of service for active duty borrowers, recent pay stubs and W-2s for the previous two years, recent bank statements, and disability award letters are just a few of the documents you will need to submit to use a VA loan for your investment property.

We believe Veterans United Home Loans is the best investment property lender for veterans because the company specializes in VA-backed mortgages and employs professionals that comprehend this loan program better than anyone else.

Aurum and Sharpe

Aurum and Sharpe is a mortgage broker’s service that can help you compare multiple lenders at once. Note that some mortgage lenders will provide better terms than others, so using Aurum and Sharpe will allow you to compare offers frequently and take your time to conduct an in-depth study.

They have a team that can help you at every stage of your loan acquisition process. They are simple to connect with, easy to work with, and can accurately respond to queries. They also provide specialized loan solutions that fit your financial situation while assisting you in making the most of your non-QM mortgage loans. 

Benefits of choosing Aurum and Sharpe 

• The presence of a job may not be necessary
• Real estate for investment is acceptable
• No PMI (Private Mortgage Insurance)
• More significant borrowing amounts are allowed.
• There is a payment option that charges interest.
• The loan may be in an LLC’s name.
• Loans for multiple homes are possible.

Lendio

Users of Lendio’s free online service obtain possible commercial loan offers from the company’s marketplace of more than 75 lenders within minutes. Lendio has funded over 300,000 loans, earning it a solid reputation for success. Investors in commercial real estate benefit significantly from online marketplaces like Lendio since they can quickly and effectively compare rates. In addition, with just one application to shop rates, they simplify the procedure in contrast to other commercial property possibilities.

Residential, multi-unit, and commercial real estate loans are all underwritten by Lendio lenders, in addition to a variety of business loans. If you are eligible for an agency loan, such as an FHA loan, your down payment may be as little as 3.5%. Otherwise, conventional commercial property credit programs require a 25% to 30% down payment.

On the Lendio platform, interest rates for commercial real estate loans begin at 4.25%. 5 Terms take a minimum of 45 days to finance and range in length from 20 to 25 years—loan amounts for commercial property range from $250,000 to $5 million.

For a smooth underwriting process, Lendio advises having the purchase contract, property blueprints, market analysis, project budget and scope of work, and evaluation of the property’s current state. Once you have chosen a lender, the process begins with a brief online application that takes around 15 minutes to complete. After that, papers are shared electronically.

We believe Lendio is a top pick for commercial property loans because Lendio’s marketplace platform makes it simple for investors to complete a single application and obtain bids from various competing lenders.

First National Bank of America

First National Bank of America (FNBA) provides services to both people and small businesses. First National Bank of America offers a variety of non-QM lending options (such as a recent bankruptcy, foreclosure, or short sale) for self-employed customers or with various credit difficulties. While its other checking and savings products are only available to Michigan residents, its certificates of deposit (CDs) and high-yield savings accounts are available to consumers worldwide.

Customers of First National Bank of America have access to some of the best CD (certificate of deposit) rates on the market, as well as high-yield savings accounts, Non-QM mortgages, business loans, Self Directed IRA loans, and other financial products.

Loan programs offered may include:

• Asset Depletion
• Max LTV of 85%
• ITIN Loans
• Minimum credit of 600 (and no credit score)
• Max DTI of 55%
• Bank Statement Loans
• Loan limit of $1.25 Million
• Recent Housing Event
• P&L Statement Mortgage

LendingOne

Bill Green and Matthew Neisser formed LendingOne in 2014 in response to their difficulties with the challenging lending climate created by strict bank requirements and the simpler but more expensive complex money options.

LendingOne has emerged as the best rehab lender in the sector because they assist investors in obtaining items previously unavailable on the market, such as pre-approval letters and proof of funds, greater leverage, and more affordable rates and fees.

Fix-and-flip and rehab-to-rent lending options are available from LendingOne. They have a 30-year fixed-rate loan for rehab to rent in addition to 5/1 and 7/1 ARM loans. Their fix-and-flip loans may finance up to 90% of your repair expenses. There are down payments of 10% to 20%. There is also the option for two years of interest-only payments on the fix-and-flip loans. Only properties with two to four units, including condos and townhomes, are eligible for LendingOne loans.

The minimal loan amount is $75,000. Your experience, income, credit, and LTV are considered when determining interest rates and loan conditions. Their costs are also openly disclosed. Closing expenses and fees apply, although they are not listed on the loan product page. However, depending on the product and circumstance, there may be some deviation from the standard need of a credit score of 680.

A recent bank statement, a list of properties you already own, a certification that you are purchasing the property for business or investment purposes, the operating agreement for your business entity, a driver’s license, the purchase and sale contract, and a lease agreement if the property already has a tenant in place are additional underwriting requirements for investors. You can apply online or by phone with LendingOne, and funding for rehab loans can happen in as little as 10 days.

We believe LendingOne is a top rehab lender because they are one of the few commercial lenders that make obtaining a pre-approval letter simple, finance up to 90% of the project’s cost, and offer lower rates and fees than their rivals.

Tips for Getting Investment Property Loans

Buying an investment property is a great way to diversify your portfolio, whether you’re buying and holding land for future development, flipping a house, buying a house for an elderly relative to live in and enjoying the appreciation when you sell it or creating a passive income stream by renting the property.

Obtaining a loan for an investment property differs from getting loans for a primary dwelling or residence. Financing frequently comes with stricter regulations and higher interest rates. There are specific requirements that borrowers must be able to meet, and there are various forms that investment property financing might take. Before approaching a lender, it is essential to understand the requirements of each type of loan and how the various choices work. By selecting the incorrect type of loan, you could negatively affect the success of your investment. 

In addition, the buyer and the property must have lender approval to obtain the funding for rental property. For this reason, the buyer needs to take a few extra procedures to increase the likelihood of acceptance. Some of those procedures may include:

1.    Review Your Credit Profile

Look for errors and stale information in your credit report. If feasible, try to have those things taken away. Experian, TransUnion, and Equifax are the three leading credit agencies. You may obtain a free copy of your credit report from them once a year at AnnualCreditReport.com or online directories like Nav.

2.    Organize Your Financial Paperwork

Get your driver’s license, Social Security card, latest two pay stubs, tax returns from the last three years, and any bank and investment statements you may have. In addition, include any business financial statements and documentation if you are self-employed. Doing this before submitting your application will speed up the underwriting procedure.

3.    If It’s Your First Investment Loan, Start Small

If you have experience managing rental property, consider how a potential purchase would fit into your portfolio and long-term objectives. Consider a single-family home or a townhouse with two units if you’re purchasing your first rental property to help you gain expertise. Gaining experience in this area can increase your chances of getting finance for larger properties.

4.    Shop Around

To locate the best price:

1. Speak with several lenders and explore your alternatives online, considering both internet lenders and conventional institutions.
2. Ask potential lenders about approval times, costs, required down payments, and whether they service mortgages following approval and funding lastly:
3. Compare financing conditions.
4. Get a Lender Pre Approval; when you submit an offer on a rental property, having pre-approval makes you more appealing to potential buyers. Since you will have given a lender some basic information and they will have made an initial commitment, a pre-approval will place you further forward in the underwriting process. You may feel more at rest knowing that your chances of getting the home funded have improved.

• Find a Property; select a real estate agent with a track record of assisting investors. Make sure to complete your research when you find a property. For example, obtain the lease information and specifics about the property’s condition if you are buying a rental property that is currently rented out. Bring your purchase and sales agreement to your lender. Once your offer has been accepted, they will order an appraisal and title search.

Bottom Line

There are various ways to get a mortgage for a rental property, provided you have good credit and enough money for a down payment. Also, keep in mind that you may have to shop around, do some research, and organize your finances before you try to get a loan for an investment property.

Aurum and Sharpe offer the most affordable investment property loans, thanks to a favorable combination of loan alternatives, affordable rates, and flexible borrower requirements. Whatever lender you go with, we hope your investment property gives you all the returns you’re hoping for and more.

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