That makes it extra important to shop around and make sure you’re getting a fair mortgage rate on your investment property before you buy. To protect themselves against the extra risk that comes with investment property financing, lenders charge a higher interest rate and have stricter qualification rules for borrowers. Thus, these types of home loans are more likely to default during hard economic times. Mortgage borrowers tend to bail on rental properties before they’d bail on their primary residence if the going gets tough. Lenders add this upcharge because they consider rental and investment property mortgages to be a riskier loan product. How much higher? Technically, the answer to that question depends on the type of investment property, your creditworthiness, and your down payment.īut as a rule of thumb, you can expect the interest rate on your investment property to be at least 0.50% to 0.75% higher than the rate on your primary mortgage.Īs a rule of thumb, you can expect investment loan rates to be at least 0.50% to 0.75% higher than the rate on your primary mortgage.įor example, today’s live 30-year fixed rate as of Jis % ( % APR), so the investment property rate would be around % to % ( % - % APR). Mortgage interest rates will always be higher on rental and investment properties than on your primary residence. How much higher are mortgage rates for investment properties? Here’s how much you can expect to pay now to finance that future cash flow.
That’s because lenders charge more for “non-owner occupied” transactions - meaning a property you don’t plan to live in.ĭespite higher rates, investing in real estate is often a good idea long-term. If you buy an investment property at the right price and finance it correctly, it can create cash flow for you almost immediately.īut getting an ultra-cheap mortgage rate on a rental or investment property is tougher than for a primary residence. Janu15 min read Investment property rates are above ‘standard’ rates
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