Home prices have been on a steady climb from the depths of the housing crash, leaving many wondering if it is still a good time to invest in the residential real estate market.

According to the National Association of Realtors, or NAR, 85% of major metro areas saw gains in existing, single-family home prices in the first quarter of 2015.

However, low interest rates are still attracting buyers and limited inventory is behind escalating prices in some desirable areas. NAR predicts continued steady growth in most of the country.

Although the tightened credit market can make it tough to secure loans for investment properties, there is some good news: A little creativity and preparation can bring loans within reach of many real estate investors and at Universal Lending DTC, we have that creativity!

If you’re ready to seek out financing for your residential investment property, these tips can improve your chances of success.

Have a sizable down payment

Mortgage insurance won’t cover investment properties, so you need at least 20% down to secure traditional financing for them. But if you can put down 25%, you may qualify for an even better interest rate and if the house needs work, both the purchase and the rehab can be financed using non-traditional financing, with as little as 15% down!

Be a ‘strong borrower’

Although many factors — among them the loan-to-value ratio and the guidelines of the program you’re applying for — can influence the terms of a loan on an investment property, investors should check their credit score before submitting an offer on a property. Your credit score will have the greatest impact on a loan’s terms.
Credit scores below a 740 can start to cost you additional money for the same interest rate. Below a 740, you will have to pay a fee to have the interest rate stay the same. The alternative to paying points if your score is below 740, obviously, is to pay a higher interest rate.
In addition, reserves in the bank to pay for all your real estate expenses, personal and investment-related, for at least six months also have become part of the lending requirement. If you have multiple rental properties, it is required that you have 6mos reserves for each property.