You’ve found the perfect property to serve as a rental house, and now you just need to secure financing. But with all the different types of loans, which is the best one for you? This article will provide an overview of single-family rental loans so that you can make an informed decision when it comes time to apply for financing.
How Are SFR Loans Different From Primary Home Loans?
SFR loans are loans that are specifically for the purchase of a single-family rental property. These loans are different from primary home loans in a few ways.
SFR loans typically have higher interest rates than primary home loans. This is because they are considered to be more risky. SFR loans also usually require a larger down payment than primary home loans. This is because the property is considered an investment, and the lender wants to ensure that the borrower has skin in the game.
Another difference between SFR loans and primary home loans is that SFR loans usually have shorter terms. This is because lenders want to minimize their risk. With a shorter loan term, the borrower will have to refinance sooner, which allows the lender to reassess the riskiness of the loan.
SFR loans are different from primary home loans in a few key ways. They have higher interest rates, shorter terms, and usually require a larger down payment.
Options for Single-Family Rental Loans
A few different types of loans can be used to finance the purchase of a single-family rental property. The most common type of loan is a conventional mortgage. This type of loan is available through most banks and lenders. Another option is an FHA loan. This type of loan is backed by the Federal Housing Administration and has more flexible credit requirements than a conventional mortgage. There are also VA loans, which are available to veterans and active-duty military personnel. These loans are backed by the Department of Veterans Affairs and have very favorable terms.
When choosing a loan to finance a single-family rental property, it is important to compare the different options and choose the one that best fits your needs. You should also consider the interest rate, fees, and other costs associated with each loan.
Tips for Qualifying For an SFR Loan
- Get your financial documents in order. When you apply for an SFR loan, the lender will want to see your tax returns, bank statements, and other financial documents. Be sure to have these ready before you start the application process.
- Know how much you can afford. SFR loans can be expensive, so it’s important to know how much you can afford to borrow. Be sure to shop around and compare rates from different lenders before you make a decision.
- Have a down payment ready. SFR loans typically require a downpayment of 20% or more. Be sure to have this saved up before you apply for a loan.
- Have good credit. SFR loans are typically available only to borrowers with good credit scores. If your credit is not good, you may still be able to qualify for a loan, but you may have to pay a higher interest rate.
- Shop around. Many different lenders offer SFR loans. Be sure to shop around and compare rates before you make a decision.