Income Property Mortgage

AAA

DEFINITION of 'Income Property Mortgage'

A loan given to an investor to purchase a residential or commercial rental property. Income property mortgages are typically much harder to qualify for and often require a borrower to include estimates of the rental income that will be received from the property. Unlike owner-occupied and single-family residences, there are few government loan programs to assist in the purchase of income properties. This leaves investors at the mercy of private lenders, who themselves are at the mercy of the credit markets.

INVESTOPEDIA EXPLAINS 'Income Property Mortgage'

Owning a rental property is one of the most common real estate goals of individual investors. Accomplishing this goal however, is much harder than the late-night infomercials would make it seem. The biggest hurdle in acquiring rental properties is securing an income property mortgage, which generally requires a larger down payment than the purchase of a primary residence. Typically, an income property mortgage requires a larger down payment relative to personal home mortgages.

RELATED TERMS
  1. Garbage Fees

    Unnecessary fees tacked onto mortgage closing costs by lenders ...
  2. Home Mortgage

    A loan given by a bank, mortgage company or other financial institution ...
  3. Principal Residence

    The primary location that a person inhabits. It doesn't matter ...
  4. Passive Income

    Earnings an individual derives from a rental property, limited ...
  5. Closing Costs

    The expenses, over and above the price of the property that buyers ...
  6. Investment Real Estate

    Real estate that generates income or is otherwise intended for ...
RELATED FAQS
  1. Can small investors buy collateralized mortgage obligations (CMOs)?

    Collateralized mortgage obligations (CMOs), which are pools of mortgage-backed securities (MBS), are available to smaller ... Read Full Answer >>
  2. What is the difference between an option-adjusted spread and a Z-spread in reference ...

    Unlike the Z-spread calculation, the option-adjusted spread takes into account how the embedded option in a bond can change ... Read Full Answer >>
  3. What are some historical examples of debt securitization?

    The first debt securities were probably sovereign debt assets that were transferred from the British government to mercantilist ... Read Full Answer >>
  4. Which has performed better historically, the stock market or real estate?

    For the majority of U.S. history – or at least as far back as reliable information goes – housing prices have increased only ... Read Full Answer >>
  5. What price-to-book ratio is considered average in the chemicals sector?

    You can use Microsoft Excel to calculate the loan-to-value ratio if you have the mortgage amount and appraised value of a ... Read Full Answer >>
  6. How can I calculate the Macaulay duration of a zero-coupon bond?

    The funds from operations is a measure of the amount of cash flow that a business's operations generates. Real estate investment ... Read Full Answer >>
Related Articles
  1. Home & Auto

    Tips For The Prospective Landlord

    Investing in rental property can generate serious income, but there's more to it than collecting rent.
  2. Entrepreneurship

    Top 10 Features Of A Profitable Rental Property

    Find out what factors you should weigh when searching for income-producing real estate.
  3. Taxes

    Tax Deductions For Rental Property Owners

    Besides creating ongoing income and capital appreciation, real estate provides deductions that can reduce the income tax on your profits.
  4. Home & Auto

    Simple Ways To Invest In Real Estate

    Owning property isn't always easy, but there are plenty of perks. Find out how to buy in.
  5. Investing

    Commercial Real Estate: How to Invest Like a Pro

    Investing in commercial real estate can add stability to your portfolio. Here's how to do it.
  6. Personal Finance

    Commercial Real Estate: How it Works

    The ins and outs of what commercial real estate companies do.
  7. Home & Auto

    What Are The Tax Advantages Of Buying A Home?

    Don't forget these deductions and credits that homeowners can use to reduce their tax bill.
  8. Investing

    Should You Buy Marijuana Stock?

    The legalization of marijuana has created a new investment niche: pot stocks.
  9. Forex

    Is Bitcoin Mining Still Profitable?

    Recent changes in technology and the creation of professional mining centers individual miners are asking themselves, is bitcoin mining still profitable?
  10. Credit & Loans

    How To Finance Foreign Real Estate

    If you don't pay cash, financing real estate abroad is likely to cost more than at home. Watch for local laws and be sure your rights are protected.

You May Also Like

Hot Definitions
  1. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  2. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  3. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  4. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  5. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
  6. Rule Of 70

    A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate ...
Trading Center