Two Ways That You Can Qualify for a No-Income Investment-Property Loan
We are proud to offer one of the finest no-income loan options for investment properties. With this program, you can get world-class financing on a property investment, and you can do it with no income documentation.
There are two ways to qualify for this loan, and it all depends on the rent you will receive once you own the property…
How is Future Rent Determined?
The qualification for this program is determined in one of two ways, but it is first dependent on the amount of rent money you will be able to receive once the property is occupied. While it would be convenient to simply state a number and move on, lenders want to see a professional estimate of rental income from the property, which will help influence their lending decision.
Before we go into how this number is used in the qualification process, let’s go over how the amount is determined in the first place. Generally, market rent will be determined by an appraiser conducting a market survey, so you don’t need a renter in place to qualify. Instead, the appraiser will use a wide set of data points, including market value and rent for similar homes.
Mortgage rent may also take into account a vacancy factor. This essentially helps the lender account for months when the property may sit unoccupied, which will impact the profitability of the investment. This vacancy factor, if applied, will take into account numerous aspects, including the overall rental market. If, for example, there are many unoccupied rental units in your area, this may be taken into account for your overall rental amount as stated by the appraiser.
Two Ways to Qualify for a No-Income Investment-Property Loan
#1: Income from Property Covers 1.1% of the Total Payment
Okay, now that you have an official rental amount, you can use this as a factor in your mortgage qualification. If the the expected rent covers 1.1% of the total payment, then you can use the future rent for mortgage qualification while ignoring all other debts.
This means that for every $100,000 in total payments, you need $1,100 in rental income. So if you have a total payment of $300,000, your future rents, as determined by a market survey, will need to be $3,300 or more in rental income.
With this option, you will be able to finance up to 80% of the purchase (20% downpayment) with an amount up to $1,000,000. If you can bring a 30% downpayment (70% LTV), you can get financing for a purchase up to $2 million.
Advantages of Using Future Rent Payments as Income
Using future rent as your income brings a wide variety of benefits. If you have a non-typical income that makes routine qualification more complicated, this option can be useful for saving a loan when other avenues fail. For example, if you are self-employed, you may not have the consistent income enjoyed by employees, which means a lender doesn’t have the straightforward income to use for qualification. Using the rental income, on the other hand, could make qualification easier and increase your chances of approval.
Advantages of Ignoring Monthly Debts
A major positive for this option is that you can ignore all other debts. Debt-to-income ratio is an important factor for lenders, as they want to see borrowers who have a steady, manageable ratio between their debts and their income. However, if you are a serious property investor, you may have debts on multiple properties; although these properties bring income, they also add to your debt load. Being able to ignore these debts could be crucial for helping you secure the best possible terms on your no-income investment-property loan.
#2: Monthly Rental Payments Do NOT Cover 1.1% of the Total Payment
If the rent money, as determined by the market survey, does not cover 1.1% of the total payment, there is a secondary version of the program that is available to investment borrowers. Just as before, this version does not require documentation of any income; the only difference is that the loan comes with a slightly higher interest rate than the first option.
Using the second option, you can secure a loan that will finance up to 75% of the purchase (25% downpayment) up to $1 million. If you can bring a 35% downpayment (65% LTV), you can get up to $2 million for your loan amount.
Despite the differences, this second option remains a popular choice for investment borrowers. It allows you to get financing on a top-quality property without the burden of rental incomes and other factors, creating more borrowing opportunities.
Advantages of Our No-Income Investment-Property Loans
Besides offering the chance to get an excellent investment-property loan with no required income documentation, this program has other incentives that make it a popular choice among investors.
One of the most notable advantages is the chance to finance up to 20 properties. While other programs will severely limit how many properties you can finance, this program gives greater leeway, increasing your investment opportunities.
It can also be used for various properties, including a single-family home or a multiunit property. You can use it for three- or four-unit properties, as well as planned unit developments and condos, allowing you to add diversity to your property-investment portfolio.
You can also close the loan in the name of an LLC, which brings significant benefits to investors. Most notably, it reduces the risk to your personal finances.
The program is available for foreign nationals, and only requires the documentation of six months worth of cash reserves. Other programs may require as much as 24 months, making this option far more accessible to many investors, especially if your net worth is tied up in other properties or investments.
Helping You Secure a World-Class Mortgage
Our staff is ready to help you secure a world-class loan on your investment properties. Contact our staff today and we’ll use our experience and knowledge to increase your chances of mortgage qualification.