How much higher is the interest rate for a rental property mortgage?

I’m looking into purchasing a property to rent out to tenants… I know the interest rate will be higher on a rental, but how much higher? Also, is the insurance cost higher or lower than regular homeowners insurance?

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2 Responses to “How much higher is the interest rate for a rental property mortgage?”

  1. lepr0kan says:

    The rate will depend upon your credit worthiness, income, debt to income ratio, usually it’s about 1% higher for most loans I complete. And insurance will be higher and initially after the closing until you find a tenant it will be very high since it won’t be occupied yet and will have to be insured as vacant.

  2. cuttin_in_mcfly says:

    On the insurance … you will want to get a commercial policy, which will cover the building even when not occupied. It will also provide you with a higher level of liability coverage, and coverage for lost income if the house becomes unihabitable due to fire or flood, etc.

    My cost for a commercial policy, when I converted my primary residence to a rental, increased 50%. It’s pricey, but it’s also a write-off on taxes.

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