Understanding Investment Lending

Our team is going to work with you one - on - one to answer your questions and add incredible value, but we are mindful of your time. Here are some questions that we are often asked - and the answers.


Does your spouse’s income need to be earned or can it be unearned/passive in order to qualify?

Using passive income to qualify for a loan is acceptable, assuming it’s enough to offset the individual’s monthly liabilities (found exclusively on their credit report) and we have a two-year history of this type of income. On a case-by-case basis, a one-year history might be considered.

If I am self-employed. Can I qualify for an investment loan?

Yes, if you can show two years’ tax returns supporting self-employment status and all other underwriting qualifications are met.

Does my spouse need to be on the loan with me?

Depending on your goals and, of course, each other’s qualifications, it is to your benefit to qualify individually, thus maximizing your access to all your conventional loan spots.

How long is the prequalification good for?

In general, a prequalification would be good for 120 days (the length of time a credit report is valid). However, assuming no negative changes to income, debt, assets and credit score, and pending some updated items (pay stubs, bank statements, etc.), a PQ is valid indefinitely.

What credit score do I need for investment funding?

Depending on where you are in the acquisition of properties, the credit score requirement changes. A person could qualify for an investment loan with a score in the mid 600’s, but this would require the individual’s application to have compensating factors — items such as strong assets or low DTI (debt to income). Once an investor reaches loan spots 7-10, however, credit score rules change and require a minimum middle credit score of 720 without exception.

Will I need to be prequalified for each new investment property?

No, you will only need to go through the full PQ process once. Of course, over time, we will need updated items for expired documentation.


How many conventional loans do I have access to?

Qualified individuals have access to 10 conventional loan spots. After you exhaust those 10, we have an additional unlimited number of loan spots under our Specialty NON-QM products.

What are current rates for investment properties?

Conventionally-speaking, rates will be less than, say, on a specialty loan product. Keep in mind that there are a variety of variables that factor into the interest rate you secure. Factors include credit score, loan size, LTV (loan to value), property type, occupancy and so on. Check with us for today’s rates.

Can I do a cash-out refinance on an investment property?

Yes. There are two types of investment cash-out refinances — standard and delayed — and the rules are different for both. A quick call with us can clear up any questions you might have about either.

Does VILG do other types of loans?

Yes, we do loans for primary residences, FHA, VA, USDA — and we offer a variety of Specialty (aka NON-QM) loans, including self-directed IRA loans.

Can I use a HELOC for a down payment on an investment property?

Yes, HELOCs are considered sourced and seasoned funds.

From start to finish, how does the whole process work?

The answer to this largely depends on you and how quickly you can provide the necessary documentation. We set a typical expectation to close at 20-45 days post prequalification. There are several factors that play into a longer close time, but, most commonly, a property’s construction completion and appraisal turn times are the factors that cause delays.


How long are appraisals good for?

120 days.

Will I need reserves for an investment property?

Yes, and depending on how many properties you have, those reserves' requirements change.

Do investment loans carry prepayment penalties?

Conventional loans do not have prepayment penalties, but some of our specialty products will.

Where does my down payment have to come from?

The down payment for an investment property must be in liquid form (checking/savings/money market accounts) and must be sourced and seasoned, meaning that we must be able to paper trail any large deposit as having originated with you. A minimum of 60 days is required for seasoning of funds.

Can you close in an LLC for an investment loan?

For a conventional mortgage, the answer is no, as you must close in your individual name. Our specialty loan products do allow the individual to close title in the LLC, but the loan itself will still be secured by the individual.

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