Real Estate Financing

Traditional Real Estate Financing

This type of loan is generally done through a mortgage broker or bank, and the lender may be a large banking institution or a quasi-government institution (Freddie Mac, Fannie Mae, etc). The requirements to qualify for a loan are based strictly on the borrower's current financial situation -- credit score, income, assets, and debt. If you don't have good credit, reasonable income, and a low debt-to-income ratio (i.e., you earn a lot compared to your monthly obligations), you likely won't qualify for traditional financing. 

Required down payment on traditional financing may vary depending on the borrower /subject property & loan type. Normally the down payments are between 3% down payment to 20% down payment.

Investor / Portfolio lending 

This option generally consists of small banks lending their own money by using their investment expertise to evaluate investment potential. Portfolio lenders sometimes will even include rehab cost with in the loan as long as the down payment consist of the full rehab cost.

Hard Money

Hard Money Lenders are usually wealthy people who lend their personal funds at higher than normal interest rate to achieve a good rate of return on their saved money.

Seller Financing 

Seller financing is simple: The seller provides the loan and agrees to sell his property to a buyer for an agreed term & interest rate. The buyer generally is required to provide a higher down payment and does not own the property until loan is paid in full. Seller financing usually means the seller has no mortgage on the property resulting in a guaranteed rate of return.

Equity Investment loan

Equity loan is based on the idea that of a partnership between the lender & the borrower. The equity investor will lend borrowers money in exchange for a fixed percentage of the investment profits. Generally the borrower does all the work and the profits are split 50/ 50.