If you’re thinking about investing in real estate using the Buy-&-Hold strategy, and you have a good amount of cash ($20k or more) and good credit, the traditional route taken through banks, credit unions and other home mortgage companies is a great way to finance your deals. Rates are currently very fair. However, because of the sub-prime housing dilemma, traditional lenders have tightened their lending criteria. Most require a 680 credit score or better for approval. Also, expect to be asked for full documentation of income and debts to be qualified. For those that qualify, most lending scenarios require at least a 20%-30% down payment, but there are still some programs that will approve you for less. If you are able to get approval, now is the time to lock in a great rate.
However, If the property that you select requires rehabbing in order to make it livable, you might have to go with another funding strategy. Traditional banks don’t really like lending to rehabbers. They see it as being too risky. But for your average “Move-in-Ready” property, Traditional financing is the way to go.