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How to Get Started: Finance Your Vacation Rental

Finance Your Vacation Rental | Mortgage Broker Texas

Do you have a vacation rental that you are hoping to finance this holiday season? The process for securing financing for a short-term rental is different than a normal residence. So, read below to learn about lending options and how to get started.

Traditional Financing

If you’re buying your first vacation rental property, the most familiar option to you will probably be a traditional or conventional loan. A traditional loan offers some of the most competitive interest rates on the market — but also has some of the most restrictive lending requirements and is the least scalable option for investors looking to grow a property portfolio.

Global Home Finance will generally look at two factors to qualify the loan: the creditworthiness and income. We allow a maximum debt-to-income ratio of around 43%.

Asset-Based Mortgage Loan

Unlike a traditional loan, asset-based loans are evaluated by looking at the actual or potential income of a given property (rental income), rather than an individual borrower’s W2 income and debt-to-income ratio.

Global Home Finance will look at the income of the property and calculate the Debt Service Coverage Ratio (DSCR) to qualify the loan. This type of loan is a significant advantage to an investor because borrowing power is not constrained by individual income.

There are options to consider when thinking about purchasing a second home. So, contact Global Home Finance today to investigate the best available financing option when buying a vacation home. We are here to help you along the way!

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