Different Types of Loans for Real Estate Investors

Real estate investors utilize financing to scale their investment portfolio and grow cash flows from their investment properties.

So what are the main types of loans that real estate investors can take out? This article will share several common loan types for real estate investors.

Real estate loans can be generally divided into two main categories by providers: institutional lenders and noninstitutional lenders.

Institutional-Lender Loans

An institutional lender is a financial institution whose loans and lending practices are strictly regulated by law. Typical institutional lenders include commercial banks, life insurance companies, savings, and loan associations.

These institutional lenders often provide conventional loans or fixed-rate mortgages that require at least 20% for a down payment and a minimum credit score of 620. These conventional loans often come with 15-year, 20-year, and 30-year loan terms.

In addition, government-insured loans have lower or no minimum down payment or credit score requirements. Some common government-backed loan providers include:

● Ginnie Mae – Government National Mortgage Association (GNMA)

● Fannie Mae – Federal National Mortgage Association (FNMA)

● Freddie Mac – Federal Home Loan Mortgage Corporation (FHLMC)

● Farmer Mac - the Federal Agricultural Mortgage Corporation (FAMC)

The advantage of loans from an institutional lender is that investors have many loan choices and generally lower down payment requirements. The downside is that they have more strict eligibility requirements overall and can cost more (with PMI insurance) than their noninstitutional counterparts.

Noninstitutional-Lender Loans

Different from an institutional lender, a noninstitutional lender is a loan provider that state or federal government agencies do not as strictly regulate.

Noninstitutional lenders are great for investors with fewer qualifications for conventional loans who want a faster, short-term financing option. These loans are ideal for investors who flip properties or invest in rental properties.

There are a large variety of noninstitutional lenders in the real estate industry - from family members to private money lenders, from hard money lenders to mortgage brokers, etc., providing various types of loans, including but not limited to:

● Private money loans

● Hard money loans

● Home equity loans

● Portfolio loans

● Seller carryback loans

Private money loans are provided by lenders who fund the loans themselves. This type of loan can often be offered efficiently, eliminating the negotiation process with a mortgage broker.

Like private money loans, hard money loans don’t require a high credit score from the borrower. A hard money lender may get their funds from other investors. They are experienced and licensed in lending loans to borrowers.

Other loans, such as home equity loans (allowing a borrower to use the equity in their home as collateral) and portfolio loans (combining multiple properties into one loan for either a new purchase or refinance), allow investors to finance their deals and expand their portfolio in creative ways.

FlipX is a private money lender that offers lightning-fast capital to fund your next deal. FlipX provides private money loans that cater to different types of real estate investments, including:

Rehab Loans

• No Monthly Payments - Monthly Payments Rolled into the Loan

• 24/7 Online Access To Draw Management

• Rates Starting At 9.5%

• Advanced Rehab Draws Available

• Single-Family (2- 4 Units), Condos, and Townhomes

• No Income, No Tax Returns, No Assets & No Reserves

• $75K - $4M Loan Amounts

• Up To 90% Acquisition LTV; Up To 100% LTV Rehab Budget

• Up To 24-Month Term Available

• LLCs, LPs, and Corporations

• Nationwide Lending

Rental Loans

• 680+ Credit Score

• 1.0 Minimum DSCR

• Single Rental Property Loan

• Individual Rental Properties

• Single-Family (2-4 Units), Condos, Townhomes

• $100K – $2M Loan Amounts

• Up to 80% LTC for Purchases

• 30 Year Fixed and Interest-Only

• Rates Starting At 7%

• Purchase, Rate & Term or Cash Out

• No Seasoning Requirements

• LLC’s, Corporations, and LP’s Only

• Nationwide Lending

Bridge Loans

• No Red Tape, No Income, No Assets, No Reserves

• Single-Family (2- 4 Units), Condos, and Townhomes

• $75K – $2M Loan Amounts

• Rates Starting At 9.5%

• Up To 80% LTV

• 6-24 Month Terms

• No Pre-Payment Penalty

• Escrow Payments

• Purchase Transactions

• LLCs, LPs and Corporations ONLY

• Nationwide Lending

• Interest Only Payments

New Construction Loans

• No Red Tape, No Income, No Assets, No Reserves

• Purchase, Delayed Purchase, Rate & Term Refinance, Refinance for Free and Clear Properties

• Up to $100K-$4M Loan Amount

• Rates Starting At 11.5%

• Non-Dutch Interest

• Escrow Payments

• 90% LTC and 75% LTARV

• 12-24 Month Terms

• LLCs, LPs and Corporations ONLY

• Nationwide Lending

Whether it is short-term or long-term financing, FlipX can provide the right solutions for you with speed and efficiency. To learn more about FlipX and its loan products, visit the website.

Summary

Choosing the right type of real estate loan is crucial for real estate investors. Real estate financing can be different for each deal, depending on the investor’s experience, credit score, capital available, and income level.

Consult your investor-friendly loan provider before making an informed decision that has a long-lasting influence on your real estate investments.