The type of property you are trying to get a loan for has a significant impact on the terms and availability of that loan. If you are a first time home buyer you may be able to get a better deal on a home mortgage than the average home buyer. The federal government offers a variety of programs and grants to first time home buyers. Lenders look favorably on first time home owners for home mortgages because they know it is the first home and that the occupants will strive to take care of the home.

If you are attempting to get a home mortgage for a second home you may not get as favorable treatment from the lending institute you are dealing with. If the home is not going to be your primary residence, the lender will see this as a bad sign because you do not have as much of an incentive to not default on the loan. If the property is not your primary property, a home mortgage will probably carry a higher rate. You will also miss out on the opportunity to take advantage of the first time home buyer programs offered by the federal government.

Types of Properties

First Home Federal governments programs and grants are available, generally can get a lower rate.

Second Home Generally will carry a slightly higher mortgage rate since it is not your primary residence, unless you can prove that you will occupy the home.

Investment Property To qualify for certain investment property loans, it helps to be in the rental business for 2 years to get a fixed rate. If you have not been in business for 2 years, you may need to do an ARM. Investment property also carries a higher interest rate.

Another type of property that loans are issued for are investment properties. These mortgages generally carry higher interest rates than owner-occupied home mortgages. The main reason for this is that the borrower is not living in the property, and there is not as much of an incentive to maintain the home at its current condition. This makes the lender a little wary when it comes to lending the money. If you have not been in the rental business for more than two years, you may get an even higher rate, or be forced to use an ARM.

Note, commercial loans are not the same as investment property loans. Commercial loans apply to properties with more than 4 units, while investment property loans apply to properties with 4 or less units.

One should consult with a qualified mortgage professional prior to implementing any mortgage strategies.

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