We are buying an investment property. With little to put down, what is the best way to finance the property?

We have a large amount of equity in our current house.
We have no bills other than the mortgage on our current house.

Is a home equity loan to get to the 20% down payment and then a conventional loan on the investment property itself the best way to go?

Or is it best to finance the investment property itself rather than using the equity in the primary residence. We could finance 100% of the loan purchase price or do a secondary mortgage to come up with a 20% down payment.

80/20 loan - interest only on the investment property.

You may be getting a little ahead of yourself. It will be necessary to secure financing which a bank may not be willing to provide. There are a lot of details which are not included here which could affect the outcome of your plan.

Talk to a tax advisor. If you take out the home equity loan for an investment property, ask how the interest is handled for tax purposes, etc.

Also, are you buying to flip? Or rent out? If to flip, then less cash out of pocket may be imprtant, if to rent out, maybe payment is the most important.....

Use your equity to pay pay 20% is the best option. This will also avoid potential mortgage insurance. Go for an interest only loan for the investment property and if possible fix the interest rate for 5 years.

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