If you’re thinking about investing in real estate but have yet to make the leap, it’s possible that the current financing market is holding you back. Just as mortgage companies loosened their lending guidelines in the early 2000s they also tightened them around 2008. Bad loans forced lenders to close down and mortgage companies fell on the sword every day, never to be heard from again.

 It’s not a secret that mortgage companies scrutinize loan applications, but have lenders really ramped up the approval requirements like never before?

Not really. If you want to compare today’s lending standards for real estate investors with loan programs say back in 2003-2007, then yes, today’s guidelines are in fact much more stringent. But instead of making up new lending rules, mortgage lenders have simply turned back the clock and today approve financing as they did just over a decade ago. What can the real estate investor expect when applying for a loan to finance investment property?

To buy and hold investment real estate, the primary source of mortgage loans are those underwritten to Fannie Mae or Freddie Mac standards. There’s not a conventional mortgage lender in the market today that does not offer a home loan offering loans using either standard.

You can first expect to provide a down payment of at least 20 percent and 25 percent if you want to get a slightly better interest rate. Credit scores for investors can vary from lender to lender but most “non owner occupied” programs ask for a minimum 660 credit score, considered in the “average” range. A mortgage company will also evaluate your ability to repay the debt each month comparing your current gross monthly income with your existing and future monthly obligations.

That’s mostly about it. It’s not scary. A mortgage company wants to see that you have steady income, good credit and enough money in the bank for a down payment, closing costs and some money left over after it’s all said and done. Hardly rocket science, but it’s how lenders have always approved loans in the past and how they’re approving them today.