First single family house investment, loan question

[Mitchell Barna]

Hello all, I am currently getting ready to get into my first deal on a single family house. I am purchasing it contract for deed from the current owner and will be using it as a rental. The owner has chosen an interest rate from the current commercial lending rates, which was higher than the current residential rate that I had been expecting. They say the reason is due to this property not being my primary residence, that the loan will have to be commercial. I have tried looking online and all over the forums to find an answer for why this is but I couldn't find anything specific. I called a local bank of mine and they said the same thing, that it would be a commercial loan as it is not my primary residence. Everything I have found online says single family houses generally do not qualify as a commercial loan and it is not zoned as a commercial property, so I was hoping someone may be able to shed light onto this for me. My initial understanding was that it would be under residential terms as it is a residential property, but perhaps I am missing something. Can anyone help to elaborate a bit? Any and all advice and insights are greatly appreciated.

Thank you,

Mitchell Barna

[Tim Herman]

@Mitchell Barna pretty simple. A higher perceived risk on a non owner occupied loan. You will do everything to stay in your personal  house but the most you can lose in a non owner occupied transaction is your down payment. You can negotiate any terms you want, If it doesn't make sense walk away.