mortgage insider author photo

An investment mortgage has different requirements for down payment and reserves than a mortgage for a home you live in. An investment mortgage is referred to as a non owner occupied and the home you live in is owner occupied.

We will focus on a Fannie Mae mortgage. According to Fannie Mae’s underwriting guidelines, the investment mortgage down payment requirement is 15%. However, with the market the way it is these days, some lenders decided they would require a higher down payment than Fannie Mae.

Investment Mortgage Down Payment

Your investment mortgage down payment may be as high as 20%. Because of the mortgage mess, lenders and their investors are being more conservative. You may have to try several different lenders to see if they have access to mortgage loan programs requiring only 15% if that is what you want. Just ask upfront if they can offer an investment mortgage for only 15% down.

And remember, your closing costs are in addition to the down payment amount. Which brings us to reserves. Reserves are assets like cash or other assets that can be easily converted to cash. These include cash in checking or savings, stocks or bonds, vested interest in retirement account, or cash value of life insurance.

You have to show 6 months PITI in reserves for an investment mortgage. If you have more than one investment property, you need 6 months PITI for each property with a mortgage on it. That requirement is only if you are buying or refinancing an investment property not if you are buying or refinancing your owner occupied home.

The automated underwriting will either require one or two months of statements showing these reserves. Any big deposits have to be explained to the underwriter. If you recently sold something and that showed up on the bank statement given to the underwriter, you have to document the sale for the underwriter.

Good luck with your investment mortgage!

Author: Terri Ewing

Previous Post:« Mortgage Ratios Calculation

Next Post:» Divorce Mortgage Mistakes

Tagged with: • •

"Our Online Quote Service Is A Guaranteed Way To Compare Mortgage Offers Quickly." - Rob K. Blake, The Mortgage Insider ...Click Here!