Non-Owner Occupied Mortgage Rates

Review current non-owner occupied mortgage rates for December 11, 2018. The table below enables you to compare non-owner occupied mortgage rates and fees for leading lenders in your area. There tends to be a wider variation in loan terms for investment property mortgages which makes shopping multiple lenders more important. The rate table enables you to compare APRs, mortgage rates, monthly payments and closing costs for different lenders, loan lengths and mortgage programs, including both fixed rate and adjustable rate mortgages.
Non-owner occupied mortgage rate pricing depends on several factors including property type, loan-to-value (LTV) ratio, loan program, loan term and the lender. Adjust the inputs in the refine your search menu to compare updated non-owner occupied mortgage rates and lenders based on your specific criteria including loan amount and if you elect to pay discount points. We recommend that you contact at least five lenders to find the best non-owner occupied loan terms including the lowest interest rate and costs.

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What You Should Know About Non-Owner Occupied Mortgages

Higher Interest Rate.

The interest rates for a mortgage on a non-owner occupied or investment property is usually 0.250% - 0.500% higher than the rate on an owner-occupied property. Additionally, closing costs for non-owner occupied mortgages are also usually higher. Please note that properties that you buy to earn rental income are considered non-owner occupied properties whereas second homes and vacation homes are considered owner occupied properties.

Higher Down Payment Required.

Lenders usually require that borrowers contribute a down payment of 20% - 25% for mortgages on non-owner occupied properties, which means your loan-to-value ratio is 75% - 80%. Additionally, investment properties are not eligible for most conventional or government-backed low or no down payment mortgage programs.

Reserves Required.

For non-owner occupied mortgages, lenders typically require that borrowers maintain a certain amount of money in reserve at the time your mortgage closes. Reserve requirements range from two-to-six months of total monthly housing expense per property depending on lender guidelines and the number of investment properties you own that are financed with a mortgage. The more investment properties you own (that are mortgaged), the greater the reserve requirement.

Mortgage Tax Benefit Does Not Apply.

The interest expense mortgage tax deduction does not apply to investment properties which is different than an owner-occupied mortgage. The good news is that mortgage interest, property tax and maintenance costs are deductible against rental income generated by the property which lower your taxable income. Borrowers should contact a tax specialist or accountant to review how tax guidelines apply to investment properties and non-owner occupied mortgages.

Landlord History is a Plus.

When you apply for a non-owner occupied mortgage, having at least a two year track record as a landlord is a significant advantage. Lenders prefer applicants that have a history of successfully managing properties and understand the unique costs, risks and responsibilities that come with owning an investment property. This applies whether you are buying an income property for the first time or refinancing. Once you have established your landlord qualifications for at least two years, it become easier get approved for a non-owner occupied loan.

How Lenders Determine Rental Income.

Calculating the income for a rental property when you apply for a mortgage may seem like a pretty straightforward exercise but like most thing related to the mortgage process it is relatively complicated. If you are buying the property and have no track record as a landlord then lenders may not factor in the projected rental income at all and you are required to qualify for the loan based on your personal income as well as you monthly debt expenses including the rent or mortgage payment on the home you live in. In a best case scenario lenders use 75% of projected property income according to a rental appraisal or 75% of the income from a signed lease agreement, if you have arranged tenants in advance of completing the property purchase. If you a refinancing a property and can provide two years of tax returns to verify the current rents then lender usually use that income figure to qualify you for the loan. Given the complexity and different methods involved it is important to understand how a lender calculates rental income before you apply for a non-owner occupied mortgage.

Limit on Number of Units in Property.

Conventional non-owner occupied mortgages apply to one-to-four unit rental properties. Properties with more than four units usually require a commercial loan which has significantly different terms, qualification requirements and conditions. Additionally, the number of properties you own is also a consideration with most lenders providing standard non-owner occupied loans on a maximum of eight properties owned by the same individual. Borrowers should check with lenders to understand how property type and the number of properties they own impacts their ability to qualify for a mortgage.

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More FREEandCLEAR Mortgage Resources

Non-Owner Occupied Mortgage Guidelines: https://www.fanniemae.com/content/guide/selling/b3/3.1/08.html

Loan Program:
Monthly Payment:
APR:
Rate:
Points : Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
Total Lender Fees:
Loan type:
Property Value:
Loan to Value:
Credit Rating:
Date Submitted:

P & I Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance.
Mortgage Insurance Mortgage Insurance: The monthly cost for a policy that protects the lender in case you're unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%. (Estimated)
Property Tax Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ... (Estimated)
Homeowner Insurance Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ... (Estimated)
Homeowner Association Fee Homeowner Association fee: (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs. (If Any)
Total Monthly Housing Payments

Points Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
Origination Fee Origination Charge: A loan origination charge is a fee charged by the lender for evaluating, processing, and closing the loan.
Credit Report Fee Credit Report Fee: Fee charged to obtain an applicant's credit history prepared by one or all of the three major credit bureaus. Used by lender to determine the borrower's creditworthiness.
Tax Service Fee Tax Service Fee: A fee charged by the lender to cover the cost of retaining a tax service agency. These agencies monitor the property tax payments on the property and report the results to the lender.
Processing Fee Processing Fee: A processing fee is a charge by the lender for clerical items associated with the loan. Examples of processing include loan set up, organization of loan conditions for underwriting, and preparing required disclosures for the borrower.
Underwriting Fee Underwriting Fee: A fee charged by the lender to verify information on the loan application, authenticate the property's value, and perform a risk analysis on the overall loan package.
Wire Transfer Fee Wire Transfer Fee: In most cases lenders wire funds to escrow companies to fund a loan. Commercial banks that perform this function will charge the lender so the fee is generally passed on to the borrower. (If Any)
FHA Upfront Premium FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception. (If any)
VA funding Fee (If any)
Flood Fee
Other Fees Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees) The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower's attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services.
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Monthly Housing Payments

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Current Non-Owner Occupied Mortgage Rates and Lenders

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What You Should Know About Non-Owner Occupied Mortgages

Higher Interest Rate.

Higher Down Payment Required.

Reserves Required.

Mortgage Tax Benefit Does Not Apply.

Landlord History is a Plus.

How Lenders Determine Rental Income.

Limit on Number of Units in Property.

Why Borrowers Compare Non-Owner Occupied Mortgage Rates on FREEandCLEAR

More FREEandCLEAR Mortgage Resources

Non-Owner Occupied Mortgage Overview

How to Get a Mortgage on an Investment Property

Mortgage Calculators

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