Investing guide

Investment property financing: the main options

An overview of the loan types investors use most, what each one is built for, and the questions to ask a lender before you shop.

Why investment loans are different

Lenders view a property you won’t live in as higher risk than a primary home. Compared with an owner-occupied loan, expect a larger down payment, a higher rate or pricing adjustment, and reserve requirements. The specifics depend on the program, the property and your finances.

Common loan types

Conventional investment property loans for 1–4 unit properties, qualified mainly on your income, credit and existing debts.
Owner-occupied 2–4 unit loans for buyers who will live in one unit and rent the others, which may allow different down payment terms in exchange for occupancy requirements.
DSCR loans, which qualify the property mainly on whether its rent covers the payment rather than on your personal income. Rates and down payments are typically higher than conventional loans.
Portfolio and bank loans that a lender keeps on its own books, sometimes used for properties or borrowers that don’t fit standard guidelines.
Short-term rehab or bridge loans used to buy and renovate a property before refinancing into long-term financing, often at higher cost.

Questions to ask a lender

What down payment and reserves will this property require?
How will rental income be counted toward qualifying?
Are there limits on how many financed properties I can have?
If I plan to refinance, how long must I own the property first, and what loan-to-value applies to a cash-out refinance?
What are the total closing costs and any prepayment penalties?

Talk to a lender early

Getting pre-approved before you search tells you your real price range and lets you write stronger offers. Talk with a lender about investment property programs before you start shopping, and we’ll work alongside them to keep your numbers and timeline on track.

General information only. This guide is educational and isn’t financial, tax or legal advice. Talk with a qualified professional about your situation.

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Financing is offered by Perez Consulting Inc. dba Top Loan Fundings, NMLS #1943565, CA DRE #02084080. Michael Marchena, NMLS #2501919. Equal Housing Opportunity. Not a commitment to lend; all loans subject to credit approval and underwriting.