Real Estate Investment Loan – What Types of Loans Are Available?


Real estate investment loan is a type of mortgage that allows you to purchase income-producing properties. These include rental homes, multifamily homes, and flipping properties for profit. However, there are some restrictions on the types of properties you can buy with these loans.


The eligibility criteria for this type of loan includes a high credit score, stable income, and a down payment of 20%. You may also need to meet other requirements.

Blanket mortgage loan

For real estate investors who own multiple properties, a blanket mortgage loan can be an excellent solution. It can consolidate the loans on all of the properties into one, and help save money on fees and interest rates. It may also be able to provide more flexibility when it comes to property sales and acquisitions. This type of loan is typically referred to as a “portfolio loan” and is available from private lenders and commercial banks.

Unlike traditional home loans, which are usually based on an amortization period of 30 years, most blanket mortgages have shorter terms. The lender may charge a single origination fee or a fee per property, but the amount is significantly lower than what is charged for individual loans. This is because the loan is backed by the collective value of the property portfolio. Defaulting on a payment could put all of the properties at risk.

The primary advantage of a blanket mortgage is that it allows you to sell a property without triggering the due-on-sale clause in the loan agreement. However, this is only true if the remaining property has enough value to cover the outstanding loan balance. Blanket mortgages are often used by builders to finance the construction of a subdivision of homes. The houses are then sold as they’re built. When a house is sold, the portion of the blanket mortgage that was used to finance that home is paid back to the lender and retired.

Portfolio loan

A portfolio loan is similar to a conventional mortgage because it allows borrowers to secure funding for real estate and repay the loan over time. The only difference is that the lender keeps the loan in its own portfolio instead of selling it on the secondary market. These loans often have higher interest rates and other fees, but they may be easier to obtain for borrowers who aren’t able to meet conventional standards.

These loans are typically offered by smaller institutions and community banks. The lenders can tailor the terms of the loan to fit a particular borrower’s needs and don’t have to follow the strict requirements of government후순위아파트담보대출 -sponsored enterprises like Fannie Mae and Freddie Mac. This makes them a great option for borrowers with a tarnished credit history, such as a foreclosure or bankruptcy.

However, a portfolio loan can have higher fees because the lender has to take on more risk when issuing the debt. They also have to pay for the opportunity to sell the debt in the secondary market, which means they can’t sell it as easily as a conforming mortgage loan.

Another downside to a portfolio loan is that it can have a more rigid credit score requirement. However, if you can provide a solid employment history and have a stable income, a portfolio loan could be the right fit for you.

Private money loan

Private money loans are ideal for real estate investors who need financing quickly. They are not bound by the same rules as traditional financial institutions, so they can offer more flexible loan terms. These include lower credit score requirements and shorter loan terms. However, these loan terms are not without risks. If the property fails to sell at a profit, it could leave the lender in a bad financial situation.

Unlike conventional mortgages, private money loans are based on the value of the property, rather than the borrower’s financial standing. This allows real estate investors to secure financing even if they don’t meet the minimum credit score or income requirements of conventional lenders. Private loans also tend to have a faster approval process than conventional loans, which can make them the perfect option for real estate investors who want to close deals fast.

Although private money loans are a popular choice for real estate investors, they do carry some risk. One of the biggest risks is that the borrower will not be able to repay the loan in time. Another risk is that a borrower may fail to fully research the lender before securing a private money loan. It’s important to find a reliable lender with good reviews, low fees, and competitive interest rates. A financial advisor can help you decide whether private money lending makes sense for your investment goals.

Hard money loan

A hard money loan is a short-term financing option that’s secured by real property. These loans are not offered by banks or mortgage lenders but by private investors and companies. They’re based on the value of the property and don’t consider a borrower’s creditworthiness. This type of financing is often opted for by real estate investors who can’t get traditional loans.

House flippers use hard money to purchase properties and make repairs and renovations that add value to the home for resale. Then, they sell the property for a profit. However, this type of lending has its risks, including high interest rates and short terms. It’s also important to remember that a hard money lender isn’t looking at your income or financial situation, so it can be more risky for you to default on this kind of loan.

It’s best to seek out a reputable hard money lender with a good reputation in the industry. Ask real estate agents or investors in your area for recommendations or search online for lenders who provide fix and flip financing. Once you’ve found a lender, talk with them to learn about their requirements and processes. It’s also a good idea to have a real estate attorney review the documents before you sign them. This can help you avoid pitfalls and protect your investment.