Investment Property Loans

Investment Property Loans: Financing Options for Real Estate Investors

Investing in real estate can be a powerful way to build wealth, generate passive income, and diversify your financial portfolio. Whether you’re buying your first rental property or expanding your investment portfolio, there are several loan options available, each tailored to different investment strategies and borrower qualifications.

1️⃣ Conventional Investment Property Loans

A conventional loan is one of the most common financing options for investment properties. These loans are not backed by the government and typically have stricter requirements than owner-occupied loans.

✔ Key Features:

✅

Down Payment:

15-25% required (20%+ to avoid private mortgage insurance).

✅

Credit Score:

680+ preferred, but some lenders may allow 620+.

✅

Debt-to-Income (DTI) Ratio:

Typically 43% or lower.

✅

Loan Limits Apply:

Subject to conforming loan limits set by

Fannie Mae & Freddie Mac

.

✅

Fixed-Rate & Adjustable-Rate Options:

Choose between predictable payments or lower initial rates.

✅

Property Types:

Single-family, duplexes, triplexes, and fourplexes.

💡 Best For:

Traditional investors with strong credit, stable income, and a down payment ready.

2️⃣ FHA Loans for Investment Properties (House Hacking)

FHA loans are not typically used for investment properties, but

they can be an option if you plan to live in one unit of a multi-family property (up to 4 units).

✔ Key Features:

✅

Low Down Payment:

3.5% (with a 580+ credit score).

✅

Live-In Requirement:

Must occupy one unit for at least one year.

✅

Lower Credit Score Requirement:

More flexible than conventional loans.

✅

Allows Rental Income:

Can use future rental income from other units to help qualify.

✅

Fixed 30-Year Loan Term:

No adjustable-rate options under FHA.

💡 Best For:

Investors who want to "house hack" by living in one unit and renting out the others.

3️⃣ DSCR (Debt Service Coverage Ratio) Loans – No Income Verification

A DSCR loan is a great option for investors who want to qualify based on rental income instead of personal income. These loans are perfect for self-employed borrowers or investors with multiple properties who may not show high W-2 income.

✔ Key Features:

✅

No Personal Income Verification:

Approval is based on the rental income covering the mortgage.

✅

Flexible Credit Score Requirements:

Typically 620-680+.

✅

Down Payment:

15-30% required.

✅

No DTI Restrictions:

Unlike conventional and FHA loans.

✅

Can Use Rental Income for Qualification:

As long as rental income covers the mortgage (DSCR of 1.0+). Some of our lenders will work with .8 ratios.

✅

Ideal for Investors Building a Portfolio:

Multiple properties allowed under one lender.

💡 Best For:

Investors with strong rental income but non-traditional income documentation.

4️⃣ Hard Money Loans – Fast & Flexible Short-Term Financing

Hard money loans are asset-based loans used primarily by fix-and-flip investors or those needing fast closings. These loans are funded by private lenders instead of banks.

✔ Key Features:

✅

Quick Approval & Closing:

Can fund in days, not weeks.

✅

Short-Term Loan:

Typically 6-24 months.

✅

Higher Interest Rates:

Usually 8-12% due to the short-term risk.

✅

Lower Credit Requirements:

The property’s value matters more than credit score.

✅

High Loan-to-Value (LTV):

70-85% financing based on the after-repair value (ARV).

✅

Ideal for Fix-and-Flip Investors:

Not for long-term buy-and-hold investments.

💡 Best For:

Fix-and-flip investors or those needing fast funding with minimal income verification.

5️⃣ Commercial Investment Property Loans

If you’re looking to finance multi-family properties (5+ units), office buildings, retail spaces, or mixed-use properties, a commercial loan is the best option.

✔ Key Features:

✅

Higher Loan Amounts:

Based on the property’s cash flow potential.

✅

Longer Terms Available:

5, 10, 20, or even 30-year amortization.

✅

Down Payment:

20-30% typically required.

✅

DSCR-Based Qualification:

Lenders focus on the property’s income vs. mortgage payments.

✅

Balloon Payment Options:

Some loans require refinancing before maturity.

💡 Best For:

Investors purchasing larger multi-family properties or commercial spaces.

💰 Which Investment Loan is Right for You?

🔹

Want a traditional rental property?

→

Conventional Loan

🔹

Looking to house hack?

→

FHA Multi-Family Loan

🔹

Need to qualify without personal income?

→

DSCR Loan

🔹

Fixing & flipping properties?

→

Hard Money Loan

🔹

Buying large multi-family or commercial real estate?

→

Commercial Loan

Whether you’re just starting or expanding your real estate portfolio, there’s an investment loan to match your strategy. Let’s find the right financing for your next property!