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What is an Acquisition Loan?
Acquisition Loans are a type of funding for real estate investors to acquire new properties based on the value of the property. These are typically funds utilized for the purchase of the property and do not include funding for renovations or repairs.
What acquisition loans are used for?
Typically for the purchase of investment properties (as opposed to owner-occupied residences) including:
- Single-Family Homes
- Condo Conversions
- Multi-Family Properties
- Mixed-Use Properties
- Commercial Properties
- Shovel-Ready Land
What is required?
You need 2 things:
- A proposed property deal
- An exit strategy (a plan to pay back the loan)
What is the maximum loan amount available?
It varies, but you can usually receive up to 70% Loan-to-Value (LTV). Typically up to 70% of the ARV (after Repair Value) would be the maximum loan amount.
What credit score is required?
The base credit score of 600 is preferred. If your credit score doesn’t meet that requirement, there are potentially other options that could have a significant impact on the interest rate and required down payment for the loan.
Can construction costs be financed in the same loan?
Technically no, Acquisition Loans never include construction costs. Fix and Flip Loans, however, include funding for both the purchase and construction costs.