Different loan requirements
You'll need to cover the down payment and closing costs to purchase your investment property. Typically, loans require a minimum 20% down payment since mortgage insurance is not available for investment properties. You'll also need to have 2 years of property management experience if you want to use your property's rental income to qualify for a loan.
Additional financial responsibilities
Investment property loans typically have higher interest rates, larger down payments, and different approval requirements. Also, you may have other expenses to consider, such as homeowners association dues, cleaning services, flood insurance, and utilities.
Certain property types — such as time-shares, coops, some manufactured homes, and bed and breakfasts — may not be available for mortgage or home equity financing. If you're considering financing one of these property types, be sure to talk to a home mortgage consultant first.
Using equity in your current home
If your current home has enough equity, you may be able to use it to buy additional property. Keep in mind, though, that by using the equity in your current home, your home becomes the security for the new loan. Talk to a home mortgage consultant for details about a home equity line of credit.
If you plan on purchasing an investment property that needs renovations, we may be able to help. Our Mortgage and Home Equity Financing program combines a first mortgage together with home equity financing. For more details, see Wells Fargo Mortgage plus Home Equity Financing.