Getting a mortgage for your first rental property in Chicago

Thinking about buying your first rental property?

Thinking about buying your first rental property?

Rents are rising. Property prices are down. Even better, mortgage rates are down even more! Last week the Chicago Tribune reported that the rate on a 30 year mortgage dropped below 4.0% for the first time. If you’ve never owned a rental property before, but are thinking of buying one, you should first talk with a mortgage consultant. Here are 3 tips on what to expect.

1. You’ll probably need a down payment of at least 20%.

2. The interest rate will probably be an extra 1/4 point (0.25%) to 1/2 point (0.5%) higher for a rental property than an owner-occupied home. So, if you qualify for a 4.0% owner-occupied mortgage, you can probably get a mortgage for a rental property between 4.25% and 4.5%.

3. If you don’t currently have any rental properties, the lender may not consider any potential rental income when qualifying you. You may need to qualify for the mortgage with your current income. After you’ve had a rental property for a year, the lender may let your apply around 70% of the rental income to your income.

There are different mortgages for rental properties. So you should talk with a mortgage consultant who has access to a variety of mortgage products. If you would like the names of some reputable mortgage consultants, call (773.793.4516) or email me! I get no fees for my mortgage referrals.

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ABOUT THE AUTHOR

Fran Bailey Fran Bailey is a Realtor who has been quoted in numerous Chicago and national publications. To schedule showings for any listings, get a free market analysis for your home or to contact Fran email her at fran.bailey@bairdwarner.com or call 773-793-4516. Learn More