What is an Investment Property?

Any property that the borrower does not occupy either as a principal residence or secondary residence is considered an investment property. Private investors, including certain non-profit organizations, can obtain an FHA-insured mortgage, provided they are approved by the appropriate Housing Opportunities Commission (HOC) and fit one of the following scenarios:

• The purchase of HUD Real Estate Owned (REO) properties
• Streamline refinancing without appraisals

Individual investors can take up mortgages made on investment properties if they qualify on credit.

Adjustable-rate mortgages (ARMs) and graduated payment mortgages (GPMs) are not allowed on these properties.

The FHA does not insure loans that are made in the name of a corporation, business partnership, sole proprietorship or trust. (Streamline refinances for mortgages originally insured in the name of businesses are the exception.)

An analysis for credit risk must be undertaken on one or more individuals together with the business entity or trust. The name of each individual plus the business entity or trust must be on the mortgage note. These parties may also appear on the property deed or title, in which case they must also be on the security instrument (the mortgage, security deed or deed or trust).