Conventional Loan Interest Rates on Investment Properties

[Alex Casperson]

Hey Everyone,

I'm looking for some info on the difference in interest rates between an investment property and a primary residence for a 30-year fixed conventional loan. I am going out to speak to lenders this week but am trying to make my analyses as accurate as possible in the mean-time.

I am investing in Massachusetts, looking for single families or small multis (2-4 units). In MA currently, average 30-year fixed rates are right around 2.9%. So for property analysis purposes, I've been using 3.5%. Do rates differ that much between primary and investment properties? Should I be using 4%?

I know that the best way to get an answer is to speak to lenders which I will be doing later this week but just wanted to see if anyone had some quick insight I could use until then. Thanks in advance everyone!!

[Jonathan Bombaci]

Hi @Alex Casperson if you do a residential loan for non-owner occupied you'll be able to get a 30 year fixed but expect the interest rate to be at or above 4%, honestly 5% wouldn't be too far out of the question depending on the bank/credit union if you're a new investor. You could also go the commercial lending route which we're seeing between 3.5% and 4.0% but you'd be looking at a 5-10 year fixed loan amortized over 25 - 30 years. 

You of course know the answer is to talk to a lender. if you are looking for any suggestions on who to talk to feel free to reachout I have a team of agents out of Lowell that focus on investment properties and we have a pretty good relationship with local lenders and credit unions. 

Best of luck!

Jon