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Investment Property Loans Arizona

Investment Property Loan Guide for Arizona

Currently, the loan charges for the investment properties are higher compared to the loans on owner-occupied residences. However, a funding property can be worthwhile especially if the home is properly financed and purchased at an exquisite price, it can lead to a direct income move. However, getting a reasonably-priced loan for a rental property can be a daunting task. This is because lenders normally rate higher for properties which are not going to be occupied by the owner. Despite the prices being higher, it is still wise to spend money on a property.

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house purchased for an investment

Loan Fees for Investment Properties

There are several factors which influence the interest fees for investment properties. These include credit score, the form of property being bought, and the credit score. The modern mortgages comply with the guidelines that are set by Freddie Mac and Fannie Mae. The charges resulting from the loan will affect your eventual interest rate. This means that as charges rise, the mortgage prices will also increase. There is a specific set of costs for proprietor-occupied property, and there could be other costs related to the investment properties. For instance, a mortgage that is funding for a property that has 20% down can have a loose which is equal to a 3.375 of the loan. This implies that the borrower will pay an extra $3,375 for every $100,000 they will borrow. In most cases, borrowers opt for a higher interest rate instead of paying more when closing. This impacts the last rate of a mortgage in that the required 3.375% in fees can be protected if you add among 0.5 and 0.75% to the last rate. This implies that if it had a 5% interest price when buying a property, you can foresee to pay an interest fee of between 5.5 and 5.75% at the moment of buying the investment property. All these comply with the single-family houses and in the event you want to purchase a duplex, you can pay an extra 1% in fees eventually. 

Why Interest Charges are raised for Investment and Rental Properties

It is evident that debtors will in most cases leave their rental properties and not their own homes in cases of financial problems. In fact, research has proven that investors can halt paying the loan of a rental property if they deem it as a bad investment. Lenders normally analyze these statistics when they are making mortgage options. They are aware of the fact that individuals will stop paying for mortgages on properties they are not living in. 

More Types of Rental Investment Property Mortgages

Just like there are many options for individuals looking to purchase primary residences, so are there for investors looking for investment property loans in Arizona. However, the mortgages are more difficult to qualify for and the interest fees are normally higher.

Conventional loans:  To acquire an investment property, it is reasonable to use a conforming or conventional loan. At least 15% down payment is needed and with a view of keeping away from the loan insurance, 20% down payment will be recommended.

Government-Backed Loans: It is reasonable to get investment property using the FHA or the VA loan as long as you are buying a multi-unit property and will be living in one of them. The minimum down payment for these loans can be as low as 0% for VA and 3.5% for the FHA loans. 

Portfolio Loans: Portfolio lenders can set their own policies for investment property loans. These plans can come up with the possibility of financing a wide array of houses or making smaller down payments. With that in mind, you will possibly need to pay higher rates. 

Commercial Loans: Presently most people look to purchase a property with over five units. Individuals are also going against a property’s implied income with the option of using commercial residential loans. These loans can be sophisticated and high-priced as well. 

Guidelines for Arizona Investment Property Loans

Your ability to become a proprietor will be determined by the loan underwriters. In the event you do not have a property administration history and you have not owned a residence prior, it can be harder. You can, however, hire an expert to handle your property and avert this hindrance. If you are financing with Fannie Mae or Freddie Mac, you can be limited to a few homes with the loan you will own. You will likewise be required to have a large amount of months’ worth of mortgage savings payment within the bank so that you can be insured when your home will not have a renter. The down payments have to be larger for investment property loans. In most scenarios, individuals will normally utilize traditional mortgages for financing when purchasing rental properties. 

How you Can Decrease Mortgage Fees for Investment Properties

Setting down a higher down payment

When you make a down payment of 20% and above, most of the extra charges that are linked to rental properties will disappear. You can borrow in opposition to the house equity so you can make a larger down payment. You can also purchase a cheaper property or even borrow against your 401 (k).

Improving your credit

Conventional loan costs depend on a person’s credit fee. If your property will be financed with a conventional loan, high credit is a must. A higher credit score allows the borrower to charge lesser rent and have an easy time generating an income flow. 

Finding Alternate Investment Financing Strategies

Vendor financing can be a cheaper option that can fit your interests. Many sellers are passed with bypassing the pressure associated with running a property. A number of vendors can consider it more reasonable to get a property off their hands instead of getting profits from buyers. In such instances, it is imperative to ensure the property we accurately appraised and inspected. Another option is working with lenders specializing in business and residential property funding. Low cost-financing options are also available when the mortgage payments, as well as the added expenses, are covered with the income from the property. 

Rental Property Mortgage FAQ

Can Investment Properties Have Higher Loan Rates?

Yes, loan rates for investment property are normally higher. Typically, they are around 0.50-0.75% over the mortgage fees for the private residence. 

Is it reasonable to get a 30-year loan for an investment property?

For rental properties, this is the most common funding option. There are, however, more options such as mortgages with terms of 10 to 25 years.

Is it possible to get a loan for an investment property?

Yes, it is. Although more documents will be required, the system is the same just with other loans. However, with a credit score of 700 and above and a down payment of over 20%, the loan process can be simpler.

Can I acquire an investment property loan with a 10% downpayment?

If you are planning to buy a 2-4 unit property and will be staying in one of them, you can get an FHA mortgage for 10% down payment. If this is not the case, you can look for creditors and banks with a reduced down payment. The vendor can also carry the investment and hence get a lower down payment.

What are down payments for investment properties like?

In conventional loans, the least down payment is 15% for a single-unit property. This implies that the prices can be better and you will be expected to pay loan coverage. In order to lower the prices, you can put a down payment of 20% or more. The minimum down payment is 25% for a property having 2-4 units. However, if you will be living in one of the units, you can get an FHA loan with a down payment of as low as 10%. 

Are there rental property loans that do not require a down payment?

It is possible to get such options though it is not easy. You can buy multi-unit properties and live in one of those. If doing so, you can get an FHA loan and take care of 3.5% down payment with a qualified donor through gift funds. There are other options of lease-to-purchase residences, operating with investment partners covering down payment, or using hard money loans.

Are there easier alternatives?

The best way to acquire a rental property is to purchase a primary house, live in it for a minimum of a year before converting it into a condo. From there, you can go ahead and move out leasing it to a tenant. Since the owner-occupied the house, you will still hold on your low-interest fees.


It is true that investment property mortgages have higher risks explaining their higher loan rates. However, rental properties have proven to be a great investment alternative. Investment property rates can be different to each borrower. To determine your possible mortgage rates, you can compare your options and get quotes from a number of lenders. The fees are constantly changing and hence you will need to reach out to lenders for the most accurate information. Our team of qualified experts at Arizona Mortgage Pros will help you with determining the loan that best fits you before you make the decision.