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Originally Posted by aceventura3
Thinking about investing in residential rental property. Do lenders use debt to income ratios the same way when buying investment property as compared to buying your own home? What percent down payment do they like to see on investment property?
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Lenders typically do use debt to income ratios when underwriting an investment property, however, there are programs out there that do not. Typically, they will include the rent from the property as income as long as you have a lease signed with the tenants. They do not use the full rental amount, but a pro-rated amount based on the vacency factor in your area.
As far as the downpayment on a rental property, typically they want to see more down than when purchasing an owner occupied residence. 30% or more down is ideal. However, there are exceptions to every rule, and some lenders have programs that will allow you to finance 100% of the purchase price of the investment property. Be careful, though, as often times the rates are substantially higher because the lender is taking such a large risk.
If you have any more questions, just let me know!