Investment properties & loans?

lets say i the bank is financing 80% of the property that im purchasing as a real estate investor, in this particular situation is it like a person just buying a home to live in? as far as the the length of the loan, i here a lot about 30year fixed deals on average for home buyers but im talking about the loan terms between the bank and a investor are they different or could it be the same?

Generally speaking, investors can get the same "type" of loan as an owner occupant but the terms will differ. Two examples of types of loans are 30 year fixed and Interest Only. Both types of loans are available to investors and owner occupants. The difference between investor and owner occ loans will be the "terms" of the loan.

The terms of a loan are based on the risk to the lender of the loan. The higher the risk the loan poses to the lender, the more the terms are affected.

For instance, an investor loan poses a higher risk than an owner occupant loan. Because of the higher risk, the lender's terms will reflect it by charging higher interest rate and require a larger down payment. While the "type" of loan is the same, the "terms" will differ.

Example:
Investor Loan:
Loan Amount: $250,000
Loan Type: 30 year fixed
Loan Terms: 20% down payment, 2 points, 7% interest

Owner Occupant Loan:
Loan Amount: $250,000
Loan Type: 30 year fixed
Loan Terms: 5% down payment, 1 point, 6.25% interest

As you can see, the loan amounts are the same but the risk to the lender is different. So for the same loan amount, the lender will charge more for the investor loan.

So while an Investor can get the same type of loan as an owner occupant, they will normally pay more to borrow the same amount of money.

Also, the lender's terms are based on risk for all loans. Two owner occupant loans for the same amount can differ in terms according to the credit worthiness of each borrower. A borrower with excellent credit will receive better terms than a borrower with fair credit if both are applying for the same type of loan. And the difference can be big. A loan to a borrower with excellent credit could get the loan at a 6% interest rate. A borrower with fair or poor credit for the same loan amount might be charged an 8%-10% interest rate to account for the higher risk.
How much of a difference can that make? A loan of $250,000 for 30 years fixed rate at 6% interest will have monthly payments of $1,499.
Just changing the interest rate to 10% changes the monthly payments to $2,194.
In this example, a person with excellent credit would pay $695 a month less than a person with poor credit for the same amount of money borrowed.

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Hope this helps. Good luck and happy house hunting!

Elliot Lau, Realtor of 22 years.

They are the same because the investor is responsible for the loan and the bank relies on the investor's ability to repay.