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Financing an investment property requires different strategies than buying a primary residence. Higher down payments, higher rates, and stricter qualification standards are the norm. But multiple financing options exist, each with distinct advantages depending on your situation and goals.

Conventional Investment Property Loans

Conventional loans for investment properties require a minimum 15% down (25% for 2-4 units). Rates are typically 0.5% to 0.75% higher than primary residence rates. You need a minimum 620 FICO (720+ recommended for best rates). Rental income from the property can be used to qualify, typically at 75% of the market rent. Maximum of 10 financed properties under Fannie Mae/Freddie Mac guidelines.

House Hacking with FHA or VA

House hacking means buying a 2-4 unit property, living in one unit, and renting out the others. Because you occupy one unit, you can use FHA (3.5% down) or VA (0% down) financing at primary residence rates. The rental income from the other units helps you qualify and covers most or all of the mortgage. This is one of the most powerful wealth-building strategies available to first-time investors.

DSCR Loans

DSCR (Debt Service Coverage Ratio) loans qualify based on the property's rental income, not your personal income. No tax returns, W-2s, or income verification required. These are ideal for self-employed investors, those with complex tax situations, or anyone scaling beyond 10 properties. DSCR rates are higher than conventional but the flexibility and speed make them popular. Check dscrdirect.net for live DSCR rates.

Portfolio Loans

Portfolio lenders keep loans on their own books rather than selling to Fannie Mae or Freddie Mac. They can be more flexible on qualification requirements but typically charge higher rates. Portfolio loans are useful for unique properties, borrowers with more than 10 financed properties, or situations where agency guidelines do not fit.