Investment property financing helps you buy, refinance or expand a rental portfolio. Because the property is a business asset, lenders look at it differently, and the right structure can make a meaningful difference to your returns.

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What It Is

An investment property loan finances a home you will not live in, such as a single-family rental, condo or 2 to 4 unit building. Lenders view these loans as higher risk than primary residences, so they generally require larger down payments and price them accordingly.

There are two broad approaches. Conventional investment loans qualify you based on your personal income and credit. DSCR (debt service coverage ratio) loans qualify primarily on the property's rental income compared with its payment, which can suit investors with complex income or several properties.

Who It Is For

• First-time investors buying a rental property.
• Experienced investors growing or refinancing a portfolio.
• Investors completing a 1031 exchange who need financing on a tight timeline.
• Self-employed investors whose tax returns do not reflect their full cash flow.

Key Features

What Lenders Look For

• Down payment: investment loans commonly require around 15% to 25% down, depending on the program and property type.
• Reserves: several months of payments in savings is typical, and more for larger portfolios.
• Rental analysis: leases or a market rent estimate from the appraiser support the property's income.
• Pricing: rates on investment properties are usually higher than on owner-occupied homes.

Common Questions