If you’ve been a real estate agent for some time, you know how important it is to have access to convenient funding solutions. Unfortunately, mortgage loans from traditional banks often come with too many hurdles, making them an unrealistic option if you want to take advantage of irresistible investing deals as they surface.
A better option is no doc loans that are far easier to qualify for and don’t require tax returns or other financial documentation. Read on to learn more about how they work and where to get financing when the need arises.
Traditional and NQ Mortgage Loans
Can You Finance an Investment Property?
Yes, you can finance an investment property. But as mentioned above, it’s best that you start with private money lenders offering no doc loans as you’re more likely to have a more streamlined lending experience than you would with a traditional bank.
Mortgage Options on Non-QM Loans for an Investment Property
An assortment of no doc mortgages is available for individuals. But if you’re planning to purchase an investment property, focus on loan products that are classified as no-income, no asset (NINA) and are based on the projected income you’ll receive from the rental property.
What Are No Doc Loans?
No doc loans are mortgage products that do not require borrowers to provide tax returns, pay stubs or other income verification documents to get approved. Instead, the amount the borrower is approved for is based on their credit history, credit scores, investment experience, liquid assets and how much they can comfortably afford to repay, as determined by the underwriter.
They’re offered by private lenders and categorized as non-qualified mortgage (Non-QM) loans.
8 Facts about Using a No Doc Loan for an Investment Property
1. No Tax Returns Required
Getting approved for a traditional investment property loan can be challenging, particularly if you take a lot of write-offs. This is due to the fact that lenders consider your gross income when you apply for a conventional loan. But tax returns aren’t required for no doc loans, possibly making them a more feasible option.
2. Simple Mortgage Process
You could also enjoy a more streamlined mortgage process when working with a private money lender to secure a no doc loan for an investment property. Plus, it’s not uncommon for these loans to go through underwriting and close at a much faster rate than conventional and government-backed home loan products.
Traditional and NQ Mortgage Loans
3. Lower Fixed Interest Rates
No doc loans generally come with steeper interest rates than you’ll find with a conventional loan and government-backed loan products. Still, you could be eligible for a fixed-rate loan with a competitive interest rate, making your monthly payments more predictable and easier to work into your company’s monthly spending plan.
4. Longer Loan Terms
Depending on the lender, you could qualify for a 30- or 40-year loan term. The major upside of this perk is the ability to stretch out the loan balance, making your monthly payments more affordable.
5. Flexible Titles on the Property
Investors aren’t required to take out loans and buy the properties in their name. Instead, there’s an option to make the purchase under a corporation, limited liability company or other legal entity or company’s name.
6. Wider Property Type Eligibility
Another significant benefit of no doc mortgage loans for investment properties is the ability to buy multi-unit properties. So, you’re not limited to a single-family home, townhome or condo. Instead, you can purchase a multi-family property with up to four units to significantly increase your earning potential.
7. No Lease or Rental Required
Most lenders don’t require you to have a lease agreement with a tenant in place before approving you for a loan. So you can buy the property first and find someone to occupy it later.
8. Earlier Refinancing
The waiting period is usually around three months if you want to refinance the loan. Then, not only can you take advantage of better rates if they become available to you, but you can possibly do a cash-out refinance to make much-needed repairs and improvements or invest in additional properties.
Where Can You Get a Non-QM Loan for an Investment Property?
If you’re ready to move forward with applying for a non-QM loan to purchase an investment property, consider Angel Oak Home Loans when scoping out lenders. It’s a full-service mortgage lender offering innovative home loan solutions to consumers and investors with varying financial backgrounds.
The Investor Cash Flow Loan is available to real estate investors without having to verify employment or income through tax returns. Plus, lengthy income statements aren’t required since the amount you’re eligible for will be determined by the cash flow on the property you’re planning to purchase.
Loan amounts range from $75,000 and $1 million, and there’s no limit on the number of properties you can acquire. However, you must own the home used as your primary residence to qualify.
There’s also the Foreign National Home Loan, which caters to investors who live abroad. Like the Investor Cash Flow Loan, eligibility is based on the projected rental income of the property.
Do you want to learn more about the Investor Cash Flow Loan or other mortgage financing solutions that could fit your needs? Visit Angel Oak’s website to submit an inquiry, and a loan officer will reach out to discuss your situation and real estate funding solutions that may work for you.