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.