Getting a loan for an investment property isn’t the same as getting one for your home. Unless you plan on living in the property, you’ll need a non-owner occupied mortgage, which comes with its own set of loan requirements and terms.

At ABL, we specialize in non-owner occupied loans for U.S. real estate investors. Whether you want to finance a fix-and-flip or a long-term rental, our loan programs can do the job.

What Is a Non-Owner Occupied Loan?

A non-owner occupied loan is a mortgage for buying or refinancing an investment property you won’t live in. Lenders treat non-occupant loans and occupant loans differently because they present different levels of risk. Hence, the two loan types come with unique qualification criteria.

Types of Non-Owner Occupied Loans

Within non-owner occupied loans, there are five main loan types:

Fix-and-Flip Loans

Fix-and-flip loans are for buying distressed or undervalued properties to rehab and sell for a profit. Investors use the sale proceeds to pay off the loan after 12-24 months. ABL’s fix-and-flip loans can finance up to 92.5% of the project cost (property and rehab) with 0-2 points and competitive interest rates.

New Construction Loans

New construction loans are for experienced investors to build properties from the ground up. ABL’s new construction loans can finance up to 70% of the land acquisition costs and 100% of the construction costs.

DSCR rental loans

DSCR rental loans are long-term mortgages for financing rental properties, including short-term rentals (STRs). ABL’s DSCR rental loans have an average DSCR requirement of 1.2 and can finance up to 80% of the property’s value.

Bridge Loans

Bridge loans are short-term loans for bridging the gap between when you buy a property and when you sell or refinance it. ABL’s bridge loans can finance up to 65% of the property’s value for 12-24 months.

Cash-Out Refinances

Cash-out refinances are loans that replace smaller existing mortgages and let you keep the difference as cash. You can then use the money to buy another property or fund a renovation. Talk to one of our cash-out refinance experts to learn more.

How to Qualify for a Non-Owner Occupied Loan

Now that you know what a non-owner occupied loan is, let’s talk about how to qualify for one.

Eligibility Requirements

First, you must meet the lender’s eligibility requirements, such as:

Minimum credit score. Many lenders, including ABL, require a credit score of at least 660.
Property type. Some lenders limit non-owner occupied loans to certain property types, such as single-family homes, multifamily buildings, or condos. ABL finances all three.
Loan size. The size of your loan must fit within the lender’s approved range. At ABL, we approve loans for anywhere from $75K to $50M, depending on the loan type.
Experience level. You may need to demonstrate previous investment experience to qualify for a non-owner occupied loan. ABL has loans for all experience levels.

Documentation You’ll Need

To qualify for a loan, you’ll also need to share financial documents with your lender, including:

Government-issued ID. This demonstrates that you are who you say you are.
Property details. This can include the address, purchase contract, title copy, etc.
Investment plan. This details the scope of work and your proposed exit plan.
Income verification. This demonstrates your ability to cover loan payments.
Proof of funds. This shows the size of your cash reserves to cover the unexpected.
LLC documents. These validate the business entity through which you’ll borrow.

Loan Terms

Finally, you must agree to the lender’s loan terms, such as:

- Loan-to-value. Loan-to-value (LTV) is a ratio that compares the loan size to the property’s value. ABL loans are available with LTVs of up to 80%.
- Loan duration. This is how long you have until the loan balance is due. Most ABL loans have terms of 12-24 months, but DSCR rental loans are available for 30-year terms.
- Interest rate. The interest rate is the cost of borrowing and depends on market conditions and your borrower profile. ABL offers loans with rates as low as 6.99%.
  - Points and fees. Most lenders charge application and origination fees (points) for processing your loan. ABL offers loans with 0-2 points.
- - Prepayment penalty. Many lenders charge a prepayment penalty if you pay off your loan early. ABL doesn’t. We want to reward you for finishing early by letting you keep the interest savings.
  - Repayment structure. Loan payments can be structured in many ways. ABL offers fully amortized and interest-only loan options.

Common Challenges and How to Overcome Them

If you’re struggling to qualify for a non-owner occupied loan, here are some common challenges and how to overcome them:

Poor Credit

If your credit score is below 660, work on boosting it by paying off bills, lowering your debts, and maintaining a low credit utilization rate. If you suspect your credit report contains an error, report it to the relevant credit bureau.

Lack of Real Estate Experience

If you lack sufficient real estate experience, start with a simpler investment, such as a turnkey rental instead of a new construction project. You can also partner with more experienced investors to improve your borrowing prospects.

Insufficient Down Payment

If you don’t have enough for a down payment, consider pulling out equity from a property you already own with a cash-out refinance or partnering with another investor who can contribute capital in exchange for a share of the returns.

Property Doesn’t Qualify

If your property doesn’t qualify for financing, work with a lender like ABL who specializes in financing unique projects, including distressed single-family, multifamily, and condo properties.

Paperwork and Closing Delays

If you struggle to produce the required paperwork, work on staying organized and partner with a lender like ABL who requires minimal paperwork and streamlines the underwriting process. We can close loans in as few as 30 days.

Get a Non-Owner Occupied Loan From ABL

Whether you’re an experienced investor or a total beginner, ABL can help you finance your next project. Our fast and flexible non-owner occupied loans are purpose-built for investors who want to boost their returns and grow their portfolio. Pre-qualify today!

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Great experience! They always answered or returned my calls immediately and walked me through the entire process and made sure all my questions were answered. I had a couple of questions weeks after my loan closed and they still responded immediately and made sure I was taken care of. Great experience and I would highly recommend ABL.

Cindy G.

I am glad I got to know Asset Based Lending, they made funding for my construction site very simple. They have a great team of people, that would go out of their way to help. Boris has been great and very helpful, I highly recommend them for all your Construction financing needs.

Mike A.

I have had the pleasure of working with Boris Akbashev for my real estate financing needs on my last 10-15 projects, and I cannot speak highly enough of his professionalism and expertise. Boris demonstrated a deep understanding of the lending process and went above and beyond to ensure I secured the best possible terms.

John S.

Truly a pleasure having ABL on every deal! Thanks to their lending expertise and timely support and guidance throughout the process to get the best loan for my deals. I can see my company growth from 1-2 flips to numerous flips, new construction, and DSCR loan to grow my portfolio.

Pedro E.

Asset Based Lending is the place to shop for all your construction needs. Their easy funding policy, makes life so much simpler for any builder to focus on building and not be worried about financing project. Boris was supper helpful to accommodate me with all me financing needs.

Ray P.

Non-Owner Occupied Loan Requirements: What Investors Need to Qualify