Investment Property Loans: Types, Best Options and Rates

Investment property loans help you buy or refinance real estate you plan to rent out.

A home that is ready for tenants may need different financing from a property that needs substantial repairs before it can earn rent. Some loans use your documented personal income to qualify, while others focus on the property’s rental income. For renovation projects, lenders may put more weight on the property’s value, your repair budget, and how you plan to repay the loan.

For a property that is ready to rent, conventional financing can be a good starting point because it may offer competitive rates and fees. As you expand, though, your financing needs may change. Buying through a business, taking on renovations, or financing several rentals together may call for a different loan. Understanding those options helps you choose financing that supports both your next purchase and your longer-term plans.

What are the main types of investment property loans?

Investment property loans can help you buy a rental, fund renovations, or finance several properties together. Conventional and DSCR mortgages are common options for homes that are ready to rent, while short-term loans can cover a purchase and major repairs before you arrange longer-term financing. If you already own property, you may also be able to use its equity to help fund your next purchase.

This guide focuses on one-to-four-unit rentals. Buildings with five or more units generally need commercial or multifamily financing with different underwriting rules.

Once you narrow down the loan options, check whether they cover the type of property you want to buy. Condos, small multifamily buildings, and vacation rentals may have additional requirements that affect eligibility. If you are considering DSCR financing, our guide to DSCR loans by rental property type explains what to check before moving forward.

How do conventional investment property loans work?

A conventional investment mortgage uses your overall finances to determine whether you can afford the rental. The lender reviews your credit, documented income and monthly debts, and may count eligible rent. This can be a good fit when your income supports the payment and you have enough money for the down payment, closing costs and required reserves.

Conventional loans are commonly available through banks, credit unions, mortgage companies and brokers. Many follow Fannie Mae or Freddie Mac standards, although each lender can set additional requirements.

Down payment, rental income and reserves

Under Fannie Mae's standard automated-underwriting purchase rules, eligible one-unit investment properties allow up to 85% loan-to-value, equivalent to 15% down. Two-to-four-unit investment properties allow up to 75%, equivalent to 25% down. These are program limits; your lender may require more.

Your debt-to-income ratio (DTI) compares monthly debt payments with qualifying gross monthly income. Rental income can help, but the lender does not necessarily count every dollar. For an eligible purchase, Fannie Mae's rental-income calculation generally uses 75% of gross rent, then subtracts the property's housing payment. Your rental-management experience affects whether a positive result can increase qualifying income or only offset the payment. Refinances may require a tax-return-based calculation.

Reserves are funds available after closing. Fannie Mae's automated underwriting generally calls for six months of reserves for an investment property, with additional requirements when you own other financed properties. The extra amount can depend on outstanding loan balances, rather than a fixed number of months for every rental.

How owning more properties affects eligibility

Conventional financing has limits beyond your DTI. Fannie Mae's automated underwriting permits up to 10 financed properties for a second-home or investment-property transaction. The count includes your financed primary residence and generally counts each eligible one-to-four-unit property once, even if it has several units or mortgages. Lenders may impose a lower limit.

If you have reached the program’s financed-property limit or your documented income is not enough to qualify, a DSCR loan may be worth considering. Our DSCR versus conventional loan comparison explains how each uses rental income and compares their other qualification requirements.

How do DSCR loans qualify an investment property?

With a DSCR loan, the lender looks at how much of the proposed mortgage payment the rental income can cover. This can help investors whose personal income is difficult to document, since standard DSCR programs generally do not require personal tax returns or use a personal debt-to-income (DTI) calculation. Your credit, available funds, property value, and rental documentation still affect approval.

For many one-to-four-unit rental loans, the lender divides the monthly rent it accepts by the property’s monthly housing payment:

Qualifying monthly rent ÷ monthly housing payment = DSCR

That monthly housing payment is commonly called PITIA: principal, interest, property taxes, insurance, and any homeowners association dues. A ratio of 1.00 means qualifying rent matches the payment. A higher ratio means rent exceeds it; a lower ratio means rent does not fully cover it.

The required ratio depends on the program, and stronger coverage can help you access better terms. Some programs look for rent to cover the payment or exceed it by 25%, or a ratio of 1.25. Others may accept a shortfall: LendingOne advertises ratios as low as 0.75, while Griffin Funding considers below-1.00 loans when reserves and the down payment support approval. Griffin also offers a separate no-ratio option, which does not use rental income to qualify.

Where DSCR can offer more flexibility

DSCR financing may suit self-employed investors, borrowers expanding beyond conventional property limits and investors purchasing through a limited liability company (LLC). Entity borrowing depends on the program and may still require a personal guarantee. Being self-employed does not automatically rule out conventional financing, so compare both when your documented income supports it.

Down payments commonly start around 20%, though some programs allow as little as 15% for borrowers with stronger qualifications, such as a credit score of at least 740. The lower down payment depends on the program and your overall application.

Cash-out limits also vary, with some programs offering financing up to 75%–80% loan-to-value (LTV). LTV is the loan amount divided by the property’s value. The maximum you qualify for depends on the program, property, and your overall application.

Eligible short-term rentals can qualify under some DSCR programs, but lenders differ in how they document and count booking income. Our Airbnb and short-term rental loan guide explains those differences.

Approval also does not establish profitability. A rent-divided-by-PITIA calculation leaves out operating costs such as maintenance, management and utilities as separate payment items. Deduct those costs when you estimate what the property could earn.

When should you consider a portfolio or blanket loan?

A blanket loan combines several properties under one loan, which can simplify a purchase or refinance involving multiple rentals. Instead of separate loans with separate terms, you have one borrowing arrangement secured by the group of properties.

The word portfolio can have two meanings. A rental portfolio loan may finance several properties together. A lender's portfolio loan can also mean a loan it keeps on its own books, even when it covers only one property. Confirm the structure before comparing offers.

Review release terms, shared collateral and maturity

Combining properties changes how easily you can sell or refinance one of them. Review these terms:

• Release payment: The principal reduction required to remove an individual property from the loan. It may exceed that property's allocated share of the debt.
• Shared collateral: All included properties secure the debt. A default can put the whole group at risk, even if some properties perform well.
• Maturity date: Some loans have long repayment schedules but shorter terms. A remaining balance may become due before the loan would otherwise be fully repaid.

CoreVest, for example, publishes rental portfolio terms of three to 10 years. That makes the maturity date an important comparison point alongside the monthly payment. Other programs offer longer-term DSCR portfolio financing.

Our DSCR portfolio and blanket loan guide explains how releases and repayment terms affect your options as the portfolio changes.

When do hard money and bridge loans make sense?

Hard money and bridge loans are short-term investment property loans that can help fund a renovation, a fast purchase, or a property that needs work before it can generate rent. They provide temporary financing until you can sell the property or qualify for a long-term mortgage. The lender puts substantial weight on the property’s value, project budget, and repayment plan, but may also review your credit, available cash, and investing experience.

Terms often run six to 24 months, and some programs offer a path to a DSCR loan once the property is ready to rent and meets the loan requirements. Rates and fees are generally higher than long-term rental financing, so compare interest costs, origination fees, charges for renovation draws, and any fees for extending the loan.

Plan how you will repay the loan

If you plan to keep the property, you may renovate it and then refinance into a DSCR or conventional investment property loan. Approval for that mortgage is separate from the bridge loan and can depend on the completed property’s value, accepted rent, condition, and how long you have owned it.

Before closing, check whether the expected refinance could cover the bridge-loan payoff and closing costs. A delayed renovation or lower appraisal may leave you needing extra cash when the balance comes due. Our DSCR versus hard money loan guide explains how temporary and long-term financing work together.

Can you use home equity to buy another rental?

Equity in a property you already own can help fund a rental’s down payment or an all-cash purchase. A home equity loan provides a lump sum, a home equity line of credit (HELOC) lets you borrow against an approved credit line, and a cash-out refinance replaces an existing mortgage with a larger one.

A home equity loan or HELOC generally adds debt alongside your first mortgage. A cash-out refinance changes the first mortgage itself, including its rate and repayment terms. Compare the combined payments and fees to decide which approach works best for your budget.

The property you borrow against secures the new debt. You still owe those payments if the new rental earns less than expected, and failing to repay can put the property used as collateral at risk.

When comparing investment property loans, confirm whether the lender accepts borrowed funds for your down payment. Fannie Mae allows eligible funds borrowed against an asset, including real estate, for down payments and closing costs. The added debt can also affect how much you qualify to borrow. DSCR and other programs have their own requirements.

Our HELOC and home equity guide for investors covers how these options use existing equity and affect repayment.

How much more do investment property rates cost?

Investment-property mortgage rates are often about 0.25 to 0.875 percentage points higher than rates for comparable owner-occupied homes. The actual difference varies by the lender, loan program, credit profile, down payment or loan-to-value ratio, property type, and market conditions.

Investment-property loans generally cost more because lenders view rental-property financing as riskier than financing for a primary residence. Conventional loan pricing can also include investment-property loan-level price adjustments (LLPAs). Fannie Mae’s current matrix applies an investment-property LLPA ranging from 1.125% to 4.125% of the loan balance for purchase loans, depending primarily on LTV; other applicable LLPAs, including those tied to credit score and property features, may also apply.

LLPAs are pricing adjustments or fees—not a fixed interest-rate increase. They may be paid upfront, financed through pricing, or reflected in a higher note rate, depending on the lender’s rate-and-point options. That is why there is no universal interest-rate premium for every investment-property borrower.

What does that difference add to the monthly payment?

Freddie Mac's 30-year fixed mortgage average was 7.03% as of September 24, 2026. Using that benchmark, the table shows what illustrative increases of 0.50 and 1.00 percentage point would cost on the same $300,000, 30-year loan. These are calculations, not investment-property rate quotes.

These payments exclude property taxes, insurance, association dues and any mortgage insurance. They assume a fully amortizing fixed-rate loan with 360 monthly payments.

If each loan remained outstanding for the full 30 years with no extra payments, the higher rates would add approximately $36,700 or $74,000 in interest. Selling, refinancing or paying extra principal would change that comparison.

Credit, down payment, loan size, property type and upfront points all influence pricing. DSCR loans may cost more than conventional financing, but compare actual offers before assuming which is cheaper. See our DSCR loan rates guide to learn how your credit, down payment, and rental income coverage affect the rate you may be offered.

How do you choose the best investment property loan?

The best loan meets your financing needs at a competitive total cost and gives you workable options during ownership. A low rate can lose its advantage if the loan needs more cash than you can commit, comes due too soon or charges heavily when you sell or refinance.

Start with the property's condition and your qualification method:

1. Buying a rent-ready property with documented income? Compare conventional financing first, then check whether another option offers better overall terms.
2. Relying on rental income or buying through an LLC? Review DSCR programs and their rent, credit, reserve and entity rules.
3. Renovating before renting? Compare bridge or renovation financing, with a realistic plan for sale or long-term refinancing.
4. Financing several properties together? Compare blanket-loan costs and convenience against release restrictions and maturity dates.
5. Using existing equity? Add that borrowing's payment and fees to the cost of the new investment, and confirm the funds are acceptable to the purchase lender.

Compare offers on the same assumptions

To compare property investment loans fairly, get at least three written quotes using the same property, loan amount, down payment, and repayment structure. Request the quotes close together so changes in pricing do not distort the comparison.

Compare the interest rate, points, lender fees, closing costs and monthly payment. Review the annual percentage rate (APR), when provided, alongside the itemized charges. APR includes certain financing costs but does not capture every future expense or restriction.

Also check prepayment penalties, interest-only periods, rate adjustments and any balance due at maturity. Banks, credit unions, mortgage companies and specialist lenders can be worth comparing; the lender's actual program matters more than its category. Our DSCR lender comparison highlights the requirements and loan options from competitive industry lenders to help you find the right fit for your needs.