Down Payment by Loan Type: Complete 2026 Table
| Loan Type | Min Down | Best Rate Down | Min Credit | Reserves | Rate (May 2026) |
|---|---|---|---|---|---|
| Conventional (1-unit) | 15% | 25% | 620 (720+ best) | 6 mo PITI | 7.25–7.75% |
| Conventional (2–4 unit) | 25% | 25% | 640 (720+ best) | 6 mo PITI all units | 7.50–8.00% |
| FHA (2–4 unit, owner-occ) | 3.5% | 10% | 580 | 3 mo | 6.25–6.75% |
| VA (2–4 unit, owner-occ) | 0% | N/A | 580 (lender req) | No formal req | 6.25–6.50% |
| DSCR Loan | 20% | 25% | 620–640 | 6 mo (many lenders) | 7.75–8.25% |
| Hard Money Loan | 20–35% | 35%+ | 600+ or N/A | Varies | 9–12%+ |
| Portfolio Loan (bank) | 15–20% | 25% | 660+ | 6–12 mo | 7.50–9.00% |
| Home Equity (to fund DP) | N/A (uses primary equity) | — | 620+ | — | 8.50–9.50% (HELOC) |
Rates as of May 2026. FHA and VA require owner-occupancy of at least one unit in multi-family properties. DSCR and portfolio loans are non-QM and vary by lender.
The 15% vs. 25% Down Decision
Putting 15% vs. 25% down on an investment property is not just about the upfront cash — it dramatically affects your rate, PMI, and monthly cash flow. Here's the real cost difference on a $300,000 investment property:
📊 15% Down ($45,000)
📊 25% Down ($75,000)
💡 Verdict: 25% down saves $418/month and eliminates PMI. Break-even on the extra $30K: $30,000 ÷ $418/mo = 71 months (6 years). If you plan to hold the property 6+ years, putting 25% down is the better financial decision. Under 6 years, preserve liquidity with 15% down.
The #1 Strategy: Use Home Equity for Your Down Payment
The most common way sophisticated real estate investors fund down payments without touching their savings: borrow against existing home equity. A HELOC or home equity investment (HEI) on your primary home provides the down payment cash — then the rental income from the new property services both loans.
Cash-Out Refinance
✅ Lowest rate (7.0–7.5%)
⚠️ Resets your mortgage
Access up to 80% LTV
HELOC
✅ Draw as needed, flexible
⚠️ Variable rate, must open before listing
Up to 80–85% CLTV
Hometap HEI
✅ No monthly payments
⚠️ Share of appreciation at sale
Up to $600K, no payments
No monthly payments on the equity access? See how much you can access from your home equity with Hometap — no interest, no monthly payments.
Reserve Requirements You Must Meet
Down payment is only part of what you need. Investment property lenders require liquid reserves in addition to your down payment and closing costs:
📋 Conventional Investment Property
- • 1–4 unit: 6 months PITI reserves
- • Each additional rental: 2% of balance in reserves
- • Reserves must be in liquid accounts (not 401K primarily)
- • 60% of vested 401K/IRA assets may count
📋 DSCR Loan Reserves
- • Most lenders: 6–12 months PITI
- • Some lenders accept 3 months for DSCR 1.25+
- • Reserves can be business accounts (unlike conventional)
- • Gift funds NOT allowed for reserves on investment
Example: Buying a $300K rental with 20% down: you need $60K down + ~$8K closing costs + $12,600 reserves (6 months at $2,100 PITI) = $80,600 total cash needed minimum.
Ready to Finance Your Investment Property?
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Frequently Asked Questions
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Advertiser disclosure: We may receive compensation from lenders and loan-matching partners when you use the links on this page. This never affects our editorial guidance. Down payment, reserve, and DSCR rules summarize Fannie Mae/Freddie Mac and lender non-QM guidelines current as of May 2026; confirm specifics with a licensed loan officer.
Meet Emily
Construction & Commercial Loans Expert
Emily Chen specializes in complex financing solutions for construction projects and commercial real estate investments. With 8 years of experience in construction-to-permanent loans and DSCR financing, she has funded over $200 million in construction and investment property projects. Her expertise in navigating construction loan complexities and commercial underwriting makes her invaluable for real estate investors and builders.
EXPERTISE:
KEY ACHIEVEMENT:
Funded $200M+ in construction projects