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How much do you need to put down to buy an investment property?

Posted by Cheryl Costa July 30, 2008 10:20 AM

MM asks:

With the current mortgage crisis, it looks like it is a great time to buy investment property. The problem is that I have little to no money to use as a downpayment. What do lenders usually look for as a % to put down for somebody looking to buy an investment/rental property? I do have excellent credit.

It probably is a good time to be looking at investment/rental property, but the bad news is that even people with top-notch credit are finding it very difficult to get loans for investment properties. Even the highest rated borrowers are going to need to put down at least 20%. Deposits as high as 40% may be required in areas where market values have dropped sharply. Similarly high down payments are also being required for people looking to buy vacation homes that they intend to use personally.

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Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.
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About the contributors

Jill Boynton is co-founder of Cornerstone Financial Planning in Newington, N.H. Along with traditional financial planning services, Boynton provides analysis specifically for divorce.
Andrew Chan is the founder of Integrative Financial Advisors in Framingham. He provides comprehensive financial planning advice and investment management services. He has been an adviser for over 12 years and works with clients to integrate all aspects of their finances including investments, retirement, education funding, and tax planning.
Cheryl Costa is a managing director at AFW Wealth Advisors, which has offices in Natick and Purchase, N.Y. She advises clients on investing, education funding, and estate planning. She holds a master’s in business administration from Boston University.
Jamie Downey has been an accountant for more than 14 years. He's a partner at Downey & Co. in Braintree. Prior to joining the firm, he served as a manager in the audit department of accounting firm KPMG.

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