Property Types & Down Payments

Single Family, Second Homes, Investment Properties & Down payment options

property types for mortgage loans

When you apply for a mortgage the “Occupancy Type” is a major factor in the amount of down payment required, loan programs available as well as interest rate.

Whether you are purchasing a home, refinancing to get a lower interest rate also known as rate and term or taking equity out of your property also known as cash out refinance, the type of occupancy is always considered by the lender / underwriter.

Three Types of Occupancy:

Owner Occupied / Primary Residence –

A principal or primary residence is a property that will be occupied by the borrower for the majority of the calendar year.

At least one borrower must occupy the property and sign the security instrument and the mortgage note for the property to be considered owner-occupied.

Second Home –

To qualify as a second home, the property typically must be at least 50 miles from the primary residence, and it cannot appear that the real estate is being purchased for rental investment purposes.

Investment Property –

Property not occupied by the owner and is typically utilized for rental income purposes. See tax returns to verify if rental income is earned.

Down Payment Requirements for purchase loans:

Owner Occupied / Primary Residence –

Purchases for VA home loans and USDA loans can go up to 100% financing, while FHA loans require 3.5% of the purchase price as a down payment.  Conventional loans require usually 3% – 25% depending on your credit score, the county you live in, the property type and your loan amount.

Second Home –

Purchasing a second home expect to put at least 10% down. Looking to refinance, plan on having around 25% equity.

Investment Property –

Down payment requirements for investment properties are from 20-25%.  If you want cash–out on an investment property, the required loan to value will be 70% or less in order to qualify.

Please note that on any high balance loan amount (above $417,000) on any of the above, the Loan to Value (LTV) requirements will change, as well as the credit score requirements.

Do you need more information of Property Types and How that may effect your Down Payment?

Call Jackie for a No Cost- No Obligation consultation. She will get you the information you need with a smile.

Jackie 949 600-0944

Jackie Barikhan

 

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