📊 Investment Property Loans at a Glance (Feb 2026)
15-25%
Down Payment
7.0-7.5%
Current Rates
700+
Credit Score
45%
Max DTI
📋 What's Covered
🏦 Types of Investment Property Loans
1. Conventional Investment Property Loan
Most common option for investors with strong financials
Requirements:
- • 15-25% down payment
- • 700+ credit score (680 minimum)
- • 6 months reserves per property
- • 45% max DTI
Best For:
- • W-2 employees with stable income
- • First-time investors
- • Properties up to $766,550
- • Long-term buy-and-hold strategy
Rate: 7.0-7.25% (0.5-0.75% higher than primary residence)
2. DSCR Loan (Debt Service Coverage Ratio)
Qualify based on rental income, not personal income
Requirements:
- • 20-25% down payment
- • 680+ credit score
- • DSCR of 1.0+ (rent ≥ mortgage)
- • No personal income verification
Best For:
- • Self-employed investors
- • Scaling a portfolio quickly
- • Investors with complex tax returns
- • LLC/entity purchases
Rate: 7.25-8.0% (slightly higher, but easier qualification)
3. Portfolio Loan
Flexible terms from banks that keep loans in-house
Requirements:
- • 20-30% down payment
- • 660+ credit score
- • Varies by lender
- • Often requires banking relationship
Best For:
- • Unique properties
- • Investors with 5+ properties
- • Non-warrantable condos
- • Mixed-use properties
Rate: 7.5-8.5% (varies widely by lender)
4. Hard Money / Bridge Loan
Short-term financing for flips and quick purchases
Requirements:
- • 20-30% down payment
- • 620+ credit score
- • Property is primary collateral
- • Exit strategy required
Best For:
- • Fix-and-flip investors
- • Auction purchases
- • Properties needing major rehab
- • Quick closings (7-14 days)
Rate: 10-15% + 2-4 points (expensive but fast)
✅ Qualification Requirements
| Requirement | 1st Investment | 2-4 Properties | 5-10 Properties |
|---|---|---|---|
| Down Payment | 15% (1-unit) / 25% (2-4 unit) | 20-25% | 25-30% |
| Credit Score | 680+ | 700+ | 720+ |
| Cash Reserves | 6 months PITI | 6 months per property | 6-12 months per property |
| DTI Ratio | 45% max | 45% max | 43% max |
| Experience | None required | 1+ year ownership | 2+ years, rental history |
⚠️ Important: Fannie Mae 10-Property Limit
Fannie Mae allows financing for up to 10 properties total (including your primary residence). Beyond 10, you'll need portfolio loans, DSCR loans, or commercial financing.
📈 Current Investment Property Rates (Feb 2026)
| Loan Type | Rate Range | vs Primary Residence |
|---|---|---|
| 30-Year Fixed Conventional | 7.00% - 7.25% | +0.50% - 0.75% |
| 15-Year Fixed Conventional | 6.25% - 6.50% | +0.50% - 0.75% |
| DSCR Loan | 7.25% - 8.00% | N/A (investor only) |
| 5/1 ARM | 6.50% - 6.75% | +0.50% |
| Hard Money | 10% - 15% | N/A (short-term) |
💡 Rate Tip: Investment property rates are typically 0.5-0.75% higher than primary residence rates. With a 25% down payment and 740+ credit score, you can get the best rates available.
💰 DSCR Loans: The Investor's Secret Weapon
DSCR (Debt Service Coverage Ratio) loans are game-changers for real estate investors. Instead of verifying your personal income, lenders look at whether the property's rental income covers the mortgage payment.
📊 How DSCR Is Calculated
Example Calculation:
Property Details:
- • Purchase Price: $350,000
- • Down Payment: 25% ($87,500)
- • Loan Amount: $262,500
- • Monthly Rent: $2,800
Monthly PITI:
- • Principal & Interest: $1,850
- • Property Taxes: $290
- • Insurance: $150
- • Total PITI: $2,290
DSCR = $2,800 ÷ $2,290 = 1.22 ✅
This property qualifies! (DSCR > 1.0)
Below 1.0
Won't qualify (rent doesn't cover mortgage)
1.0 - 1.25
Qualifies with higher rate/down payment
1.25+
Best rates and terms available
🏠 Using Rental Income to Qualify
For conventional loans, lenders typically count 75% of the expected rental income to offset your DTI. Here's how it works:
Rental Income Calculation Example
In this example, the rental income doesn't fully offset the mortgage, so $225/month is added to your debt obligations for DTI calculation.
📋 Documentation Needed for Rental Income
- • Existing rentals: 2 years of tax returns showing Schedule E
- • New purchase: Appraisal with comparable rent analysis
- • Signed lease: If property is already rented
- • Property management agreement: If using a manager
🎯 Smart Investor Strategies
1. House Hack First
Buy a 2-4 unit property, live in one unit, rent the others. You can use FHA (3.5% down) or conventional (5% down) owner-occupied financing, then move out after 1 year and keep it as an investment.
2. BRRRR Method
Buy, Rehab, Rent, Refinance, Repeat. Purchase undervalued properties, renovate, rent out, then refinance to pull out your capital and repeat the process.
3. Scale with DSCR Loans
Once you hit the 10-property Fannie Mae limit, switch to DSCR loans. They don't count against your personal DTI and allow unlimited properties based on each property's cash flow.
4. Use LLCs Strategically
DSCR and portfolio loans allow LLC ownership for liability protection. Conventional loans require personal ownership initially, but you can transfer to an LLC after closing (check with your lender first).
⚠️ Common Mistakes to Avoid
❌ DON'T
- • Underestimate vacancy and repairs (budget 25-30%)
- • Forget about cash reserves requirement
- • Assume you can use FHA for investment properties
- • Ignore property management costs
- • Buy based on appreciation alone
- • Overlook insurance requirements
✅ DO
- • Run numbers conservatively
- • Build 6+ months reserves before buying
- • Get pre-approved before making offers
- • Factor in all expenses (PITI + repairs + vacancy + management)
- • Focus on cash flow, not just appreciation
- • Get landlord insurance, not homeowner's
Ready to Build Your Real Estate Portfolio?
Get pre-approved for an investment property loan. Compare rates from lenders who specialize in investor financing.
❓ Frequently Asked Questions
Can I use an FHA loan for an investment property?
No, FHA loans are only for primary residences. However, you can buy a 2-4 unit property with FHA, live in one unit, and rent the others. After 1 year, you can move out and keep it as an investment.
How many investment properties can I finance?
Fannie Mae allows up to 10 financed properties (including your primary residence). Beyond that, you'll need portfolio loans, DSCR loans, or commercial financing, which have no property limits.
What's the minimum down payment for an investment property?
For a single-family investment property, the minimum is typically 15% with excellent credit. For 2-4 unit properties, expect 25% minimum. DSCR and portfolio loans usually require 20-25%.
Can I buy an investment property in an LLC?
Conventional loans require personal ownership. DSCR and portfolio loans often allow LLC ownership. You can also buy personally and transfer to an LLC after closing (but check with your lender first, as this may trigger the due-on-sale clause).
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Emily Chen
Investment Property & Commercial Loans Specialist • 8+ Years Experience
Emily specializes in helping real estate investors build portfolios through strategic financing. She's closed over $200M in investment property loans and regularly speaks at real estate investor meetups.