Financing an investment property is a different conversation from buying your primary home. The down payment is bigger, the rate is higher, and lenders ask harder questions about reserves and rental income. None of it is exotic, but the rules are stricter.
Most conventional investment property loans require 15 to 25 percent down depending on the property type and your credit profile. Rates are typically higher than primary residence pricing, and lenders will require cash reserves left over after closing, often two to six months of payments per financed property.
Mortgage insurance options are limited or not available, so more skin in the game is usually required up front.
For a property you already own, lenders typically use a portion of the documented rental income from your tax returns. For a new purchase, they usually use a portion of the market rent supported by an appraiser's rent schedule. The portion used is rarely 100 percent. Underwriters discount it to account for vacancy and expenses.
If your tax returns understate your real cash flow, a debt-service-coverage-ratio loan (often called DSCR) can be worth a look. These programs qualify the property based on its rental income rather than your personal income, which can help self-employed investors or anyone with complex returns. Pricing and reserve requirements vary, so it pays to compare.
Related glossary terms
A practical checklist with true monthly-payment math, loan choices, cash-to-close planning and a fillable buying worksheet.
Free fillable PDF. No email or signup required. Educational information, not a loan offer or personalized advice.
HUD has rescinded the requirement that newly built FHA and USDA homes meet the 2021 IECC. Here is what actually changed, who it affects, and what it does and doesn't do for prices.
The 20 percent rule is a myth left over from a different era. Here is what actually applies in 2026.
Optional and free mortgage education by email for buyers and homeowners. No account required. Unsubscribe anytime.
