Florida Investment Property Loans

Looking to buy an investment property in Florida? Increase your income with an investment/rental property and take advantage of several tax deductions.

Florida Investment Property Facts

Investment properties or rental properties are a great way to build wealth and make an additional income.
Investment properties also provide tax benefits and historically provide a more stable long-term investment compared to the stock market.
You can buy a property by the beach and turn it into a weekly rental, or buy in early on a promising, expanding property and take advantage of rising property values.
To get the best rates for an investment property, you’ll need to put a 25% down payment (can’t be gifted).
You need a credit score of at least 680 and a debt-to-income ratio lower than 45%.

Today’s rates

Conventional Loans

Rates for Primary Home Purchase

5.625% (5.775% APR)

5.5% (5.654% APR)

5.125% (5.337% APR)

FHA & VA Loans

Rates for Primary Home Purchase

5.25% (6.098% APR)

5.25% (5.548% APR)

Rates, terms, and fees as of May 12, 2023 1:07 pm and subject to change without notice. Select a product to view important disclosures, payments, assumptions, and APR information. Please note we offer additional home loan options not displayed here. Rates for Primary Home Purchase.

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How to get a loan for investment property in Florida?
Preferably you need to apply for a conventional mortgage with a mortgage broker or lender and disclose that you plan on using it as an investment property by renting it out to long-term tenants or short term rentals such as Airbnb.
Can I put less than 20% down on an investment property?
you can get an investment property loan in Florida with as little as 15% down but your rate and pmi would be much higher than if you were putting 25% down and avoiding pmi.
How much are closing costs?
Standard closing costs are around 2.5% - 3% of the loan amount. For example, if you have a mortgage that is worth $300,000, you can expect to pay around $7,500 - $9,000 in closing costs.
Can you use rental income to qualify for an investment property?
Yes! When you order an appraisal for an investment property, you can also order a 1007 or a Single-Family Comparable Rent Schedule. If you purchasing a multi-unit home, the appraiser will complete a Form 1025 Small Residential Income Property Appraisal Report. The appraiser will take into account the fair market rent for the investment property you are looking to purchase. This is going to be determined by comparable rental properties in the market area. On conventional loans, you can use 75% of the market amount to calculate what the property's net cash flow would be.
What percentage of the rental income will be used on an investment property?
Lenders will use 75% of the rental income reported to be used for qualifying purposes. This can be shown by providing your last two years' personal tax returns showing the property reported on your Schedule E. If you just purchased the home and it wasn't filed on the tax returns, you can provide a lease agreement that you have with the tenant as well as proof of receipt of rental income by providing your bank statements showing the consistent amount of rent each month being received.
What are my options if the home appraisal comes in lower than the contract price?
There are several options to consider. First, you can decide you can make up the difference and pay the additional gap. You can look to convince the seller to lower the purchase price to match the appraised value. If for example, there is a $20,000 gap between the purchase price & appraised value, you can negotiate and look to meet in the middle. If you feel the appraised value is low, you can look to appeal the appraisal and provide additional comparables to help your case on why you feel the value should be higher.
What are discount points on a mortgage?
Discount points are additional fees based on a percentage of the loan amount that is used to lower the mortgage rates in Florida.
What kind of a loan do I need for investment property?
To get the best rates you will need a conventional loan for purchasing an investment property in Florida. However, if you don't qualify for a standard conventional loan you can apply for a non-QM loan such as DSCR but the rates will be higher than standard conventional loans.
Can you roll your closing costs into your mortgage?
Only on a refinance home loan. You can only roll the closing costs into a mortgage loan on a refinance transaction. However, you cannot roll the closing costs on a purchase transaction.
What's the minimum down payment on an investment property duplex or 2-4 unit property?
For a conventional mortgage, you would need to put down at least 15% for a multi-unit investment property with at least a 680 qualifying score. If your score is lower, lenders may want you to put down as much as 25% for a score of 620 or higher.
How do you calculate discount points?
Each ‘discount point’ is essentially one percent of the loan amount. For Instance, 1 point of a $100,000 loan would be $1,000.
Can you buy an investment property with someone else's money?
No you cannot. Under conventional mortgage guidelines, any funds used in a real estate transaction would need to be verified. The funds would need to come from an account that you own and would need to provide proof of funds being used for your closing costs and down payment. For an investment property, you would not be able to use someone else's money to purchase the property.
Can you buy an investment property in a LLC?
Most lenders do not allow you to purchase a home with a LLC. That is because of the limited liability that it offers. A person can not be personally liable for the LLC or the corporation's debts. That is why typically a lender will not extend out a loan to a LLC.
What's the minimum down payment on an investment property condo?
For a condo in Florida, the minimum down payment is going to be at least 15-20%. Your condo will also need to go through a review by the lender. If your condo is an 'established' project, it would go through a limited review. An established project has at least 90% of units sold & closed, the project is 100% complete including all the units as well as common areas, with the project not subject to any additional phasing, and control of the association has been turned over to the unit owners. A full review is needed if the buyer has or will have less than 10% equity in the unit, the condo will be used as a rental property (if it is a rental, the amount of equity doesn't matter), or the condo is not considered an established project. The lender will need from the homeowner's association a condo questionnaire, current annual budget of the association, the bylaws of the association, & the articles of organization.

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