Property Management Blog

Conventional Loans to Finance Real Estate Investments

Conventional Loans to Finance Real Estate Investments

Most people considering real estate investing are familiar with the real estate investment financing option of securing a conventional loan to purchase a property.

However, it’s important in this series to give a good overview of all the options, and to understand when it may be good to use one financing option over another one.

As you launch your real estate investing business and grow it, you’ll probably use a variety of options to finance deals. This is common.

One factor that plays into the type of financing you choose is your own financial condition at the time.

We’ve already discussed financing your property with all cash in article one of this series.

Securing a conventional loan, is similar to the all-cash option. It assumes you’re in a strong financial position and have good credit.

If your personal credit is questionable and you don’t have 20 to 30 percent of the total property price to put down, plus another 6 months of mortgage payments saved up, then getting a conventional loan may not be the option for you.

It does not mean that you can’t purchase a property – for there are many ways to finance properties – but the conventional way may not be in the cards.

Conventional Loans

A conventional mortgage abides by the rules set by Fannie Mae or Freddie Mac, and unlike an FHA, VA, or USDA loan, it's not backed by the federal government.

As I alluded above, in the case of a conventional loan, your personal credit score and credit history determine your ability to get approved, and what kind of interest rate applies to the mortgage. Don’t be surprised if the bank lender also wants to review your income and assets.

Lastly, the lender will want to verify that you can afford both your home mortgage and the investment property mortgage.

Why not hire Utz Property Management to take care of the job for you?

You can start by scheduling your PROPERTY PROFITS STRATEGY SESSION.

In This FREE 1 Hour Session, an expert real estate investment coach from our team will work personally with you to...

  • Examine your current real estate investment portfolio/plans to see what’s working and what’s hurting. Discover where you’re making money and losing it.
  • Search for the diamonds in your backyard, the low-hanging profit opportunities that can be made with minor tweaks.
  • Diagnose the biggest roadblock to scaling your business fast and profitably.
  • Present the best path for tweaking your investment game-plan so you can build wealth faster, with more predictability and stability.


Read next article in this series:

Part 1     Part 2     Part 3    Part 4     Part 5     Part 6