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Rental properties can be a good source of income, offer appreciation opportunities as real estate increases in value and have tax implications which can mean less taxes for you. In this day and age, a minimum 20% down payment is required for all non-owner occupied properties, but this has varied over time.
Qualifying for this type of mortgage is the same as an owner-occupied property, but you will be able to add some of the rental income to debt service the loan. To determine rental value, lenders will use a signed lease or if no one is living there at present, a letter of economic rent ($65 through a certified appraiser) can serve as a substitute. Of the determined rental monies, lenders will differ on how much they will allow you to add to your income. You will see either 80% of the rent, 10 months rent out of 12 or 6 months rent out of 12 added to your income. Your broker will use the lender which is most helpful to you and your situation.
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