A residential investment loan provides financing that allows the borrower to purchase or refinance a residential non-owner-occupied property, which means that the borrower will not occupy the property. Instead, the property is used to generate income, usually by renting out the property, or by fixing and flipping it.
To qualify for a residential investment loan, the subject property must have 4 units or fewer (quadplexes, triplexes, duplexes, and single-family residences). A property with 5 or more units is considered a commercial property and will require a commercial real estate loan instead. (If you need a commercial loan, you should consider these creative commercial real estate loans with flexible requirements.)
Here are the traditional residential property types eligible for these types of loans:
- Single-family residences
- 2-4 units (duplexes, triplexes, quadplexes)
- Condominiums (warrantable)
- Townhomes
- Planned urban developments (PUDs)
There are also creative loan programs that cover non-traditional property types, including:
- Non-warrantable condominiums
- Co-ops
- Short-term rental properties (e.g., condotels or condo-hotels, Airbnb, Vrbo, etc.)
