As the real estate market continues to soar, investors are on the lookout for opportunities to grow their portfolios. One of the most popular ways to do this is through investment properties. But, does Rocket Mortgage, one of the nation’s largest online mortgage lenders, offer financing options for investment properties? In this article, we’ll delve into the world of investment property financing and explore Rocket Mortgage’s offerings.
The Basics of Investment Property Financing
Before we dive into Rocket Mortgage’s specific policies, it’s essential to understand the basics of investment property financing. Investment properties are real estate assets purchased with the intention of generating rental income, flipping, or holding for long-term appreciation. When it comes to financing these properties, investors have several options:
Conventional Loans
Conventional loans are the most common type of financing for investment properties. These loans can be used for properties with 1-4 units and typically require a 20% down payment. Conventional loans are not insured by the government, and the interest rates are generally lower than those offered by government-backed loans.
Government-Backed Loans
Government-backed loans, such as FHA loans and VA loans, are also available for investment properties. These loans offer more lenient credit score requirements and lower down payment options. However, they often come with higher interest rates and mortgage insurance premiums.
Hard Money Loans
Hard money loans are a type of short-term, high-interest loan used for fix-and-flip projects or other investment opportunities. These loans are typically offered by private lenders and are based on the property’s value rather than the borrower’s creditworthiness.
Rocket Mortgage’s Investment Property Financing Options
Now that we’ve covered the basics, let’s explore Rocket Mortgage’s investment property financing options.
Rocket Mortgage does offer financing options for investment properties, but with some caveats. Rocket Mortgage, also known as Quicken Loans, offers conventional loans and government-backed loans for investment properties. However, their options are limited to 1-4 unit properties, and the loan terms may vary depending on the type of property and the borrower’s creditworthiness.
Rocket Mortgage’s Conventional Loan Options
Rocket Mortgage offers conventional loans for investment properties with 1-4 units. These loans can be used for purchases, refinances, or cash-out refinances. The loan terms are as follows:
- Loan amounts: $50,000 to $484,350
- Loan-to-value (LTV) ratio: Up to 80%
- Credit score requirements: 620+
- Interest rates: Competitive rates, but may vary depending on credit score and loan terms
Rocket Mortgage’s Government-Backed Loan Options
Rocket Mortgage also offers government-backed loans, such as FHA loans, for investment properties. These loans are ideal for investors who want to put down a lower payment or have less-than-perfect credit. The loan terms are as follows:
- Loan amounts: $50,000 to $331,760
- Loan-to-value (LTV) ratio: Up to 96.5%
- Credit score requirements: 580+
- Interest rates: Competitive rates, but may vary depending on credit score and loan terms
What’s Missing from Rocket Mortgage’s Investment Property Financing Options?
While Rocket Mortgage offers a range of financing options for investment properties, there are some notable absences. Here are a few things to keep in mind:
No Hard Money Loans
Rocket Mortgage does not offer hard money loans for investment properties. If you’re looking for a short-term, high-interest loan for a fix-and-flip project, you’ll need to explore other options.
No Jumbo Loans
Rocket Mortgage does not offer jumbo loans for investment properties. Jumbo loans are used for larger loan amounts (typically above $484,350) and are often required for high-end investment properties. If you need a jumbo loan, you’ll need to explore other lenders.
Limited Multi-Unit Options
Rocket Mortgage only offers financing options for 1-4 unit properties. If you’re looking to finance a larger multi-unit property, such as an apartment complex, you’ll need to explore other lenders.
How to Get Started with Rocket Mortgage’s Investment Property Financing
If you’re interested in exploring Rocket Mortgage’s investment property financing options, here’s how to get started:
Check Your Credit Score
Before applying for a loan, check your credit score to ensure you meet Rocket Mortgage’s minimum credit score requirements. You can check your credit score for free on various websites, such as Credit Karma or Credit Sesame.
Gather Your Documents
You’ll need to gather financial documents, such as bank statements, tax returns, and income verification, to complete the loan application process.
Apply Online or Call a Loan Officer
You can apply for a loan online through Rocket Mortgage’s website or by calling a loan officer directly. A loan officer can guide you through the application process and help you determine the best loan option for your investment property.
Conclusion
Rocket Mortgage does offer financing options for investment properties, but with some limitations. While they don’t offer hard money loans or jumbo loans, their conventional loan and government-backed loan options can be a great fit for investors looking to finance 1-4 unit properties. By understanding the basics of investment property financing and Rocket Mortgage’s specific offerings, you can make an informed decision about your next investment opportunity.
Does Rocket Mortgage offer investment property loans?
Rocket Mortgage, the online mortgage lender, does offer investment property loans to its customers. However, there are certain requirements and restrictions that apply. For instance, Rocket Mortgage only offers investment property loans for one-to-four-unit properties, which means you can finance up to four units with a single loan.
Additionally, Rocket Mortgage typically requires a minimum credit score of 620 for investment property loans, and the borrower must have a debt-to-income ratio of 36% or less. The loan options and rates may vary depending on your creditworthiness and the type of property you’re purchasing. It’s essential to review Rocket Mortgage’s investment property loan options and requirements before applying.
What types of investment properties can I finance with Rocket Mortgage?
Rocket Mortgage allows you to finance various types of investment properties, including single-family homes, townhouses, and condos. However, as mentioned earlier, they only offer loans for one-to-four-unit properties. This means you can finance a duplex, triplex, or quadruplex, but not a larger apartment building.
Moreover, Rocket Mortgage doesn’t finance investment properties that are non-warrantable condos or condotels. Non-warrantable condos are those that don’t meet Fannie Mae’s or Freddie Mac’s condo project requirements, while condotels are condominium units that operate as hotels or have a significant portion of the units used as rentals.
Can I refinance my existing investment property with Rocket Mortgage?
Yes, Rocket Mortgage does offer refinancing options for existing investment properties. You can refinance your investment property to lower your interest rate, tap into the property’s equity, or switch from an adjustable-rate to a fixed-rate loan. The refinancing process with Rocket Mortgage is similar to the traditional mortgage application process, requiring documentation and evaluation of your creditworthiness and property value.
Keep in mind that Rocket Mortgage’s refinancing options and rates may vary depending on your credit score, loan-to-value ratio, and property type. You’ll need to meet their refinancing requirements, which may include a minimum credit score of 620 and a debt-to-income ratio of 36% or less.
What are the interest rates and fees for Rocket Mortgage investment property loans?
Rocket Mortgage’s interest rates and fees for investment property loans vary depending on several factors, including your credit score, loan amount, property type, and loan term. Generally, interest rates for investment property loans are higher than those for primary residences, and Rocket Mortgage is no exception.
As for fees, Rocket Mortgage typically charges an origination fee, title insurance, and appraisal fees, among others. The lender may also require an escrow account for property taxes and insurance. You should review Rocket Mortgage’s loan estimates carefully to understand the total costs involved and factor them into your investment strategy.
Can I use an LLC to finance an investment property with Rocket Mortgage?
Rocket Mortgage does allow you to use an LLC (Limited Liability Company) to finance an investment property, but there are some restrictions and requirements. The LLC must be a single-member LLC or a multi-member LLC with a limited partnership agreement. Additionally, all members of the LLC must guarantee the loan, which means they’ll be personally responsible for repaying the loan.
Keep in mind that using an LLC to finance an investment property with Rocket Mortgage may require additional documentation and underwriting review. This can lead to a longer application process and potentially higher interest rates or fees.
How do I apply for an investment property loan with Rocket Mortgage?
Applying for an investment property loan with Rocket Mortgage is similar to the traditional mortgage application process. You can start by pre-qualifying online or speaking with one of their loan experts. They’ll guide you through the application process, which typically involves providing documentation such as income verification, credit reports, and property information.
Once you’ve submitted your application, Rocket Mortgage will review your creditworthiness, property value, and loan options. They’ll provide you with a loan estimate outlining the terms, rates, and fees involved. If you’re satisfied with the offer, you can proceed with the loan and finalize the purchase of your investment property.
Does Rocket Mortgage offer any special programs for real estate investors?
Rocket Mortgage does offer special programs and discounts for real estate investors, particularly those who are repeat customers or have a large portfolio of investment properties. For instance, they may offer discounted interest rates or reduced fees for investors who meet certain criteria, such as having a high credit score or a significant amount of cash reserves.
Additionally, Rocket Mortgage has partnerships with real estate investor organizations and platforms, providing exclusive benefits and discounts to their members. These special programs can help real estate investors save time and money on their investment property loans, making it easier to grow their portfolio and achieve their investment goals.