Investment property loans are fundamentally different from primary residence mortgages. Lenders view rental properties as higher risk, so requirements are stricter: higher down payments, higher credit scores, more reserves, and higher rates. Expect to pay 0.5-1% more in interest than on a primary residence.
15-25% down. 700+ FICO recommended. 6+ months reserves. 75% of projected rental income can be used to qualify (appraiser provides market rent estimate). Fannie Mae allows up to 10 financed properties. Rates 0.5-1% higher than primary residence. Best for: investors with strong credit and significant cash reserves.
20-25% down. No personal income verification. Qualification based on property cash flow, not your personal income. DSCR = rental income ÷ mortgage payment (must be ≥ 1.0-1.25). No tax returns, pay stubs, or W-2s required. 620+ FICO. Best for: self-employed investors, investors who've maxed out conventional loans, or anyone wanting income-free qualification.
Flexible terms — set by the lender. Held by the lender, not sold to Fannie/Freddie. Can have unique features: interest-only periods, blanket loans (multiple properties under one loan), rehab-to-rent programs. Higher rates but more flexibility. Best for: unique situations that don't fit conventional guidelines.
3.5% down. Must occupy one unit. FHA allows 2-4 unit properties with just 3.5% down if you live in one unit. This is the lowest-barrier entry to real estate investing. Rental income from other units can help you qualify. After 1 year, you can move out and keep the FHA loan. Best for: first-time investors wanting to start with low capital.
| Requirement | Investment Property Standard |
|---|---|
| Down Payment | 15-25% (conventional); 20-25% (DSCR); 3.5% (FHA owner-occupied multi-unit) |
| Credit Score | 680+ (conventional); 620+ (DSCR); 580+ (FHA) |
| Cash Reserves | 6-12 months PITI for each investment property (conventional). 2-6 months for DSCR. |
| DTI | Max 45% (conventional — all property mortgages counted). N/A for DSCR loans. |
| Rental Income | 75% of market rent can offset mortgage. Must be documented (lease or appraiser estimate for new purchase). |
The BRRRR method (Buy, Rehab, Rent, Refinance, Repeat) is one of the most popular real estate investing strategies. Financing each phase: Buy + Rehab: Hard money or private money loan, or cash. Refinance: After rehab and tenant placement, refinance into a conventional or DSCR loan based on the new, higher appraised value. The goal: pull your original cash out (or more) to fund the next deal. Dream Financial Management can connect you with lenders for both the short-term acquisition and the long-term refinance phases.