This updated guide gives five practical tips for securing investment property loans: expect higher down payments and stricter underwriting; pick loan types that match your investment strategy (including DSCR, portfolio, and bridge loans); prepare complete documentation and reserves; shop across banks, brokers, and online lenders while comparing APRs and fees; and work with experienced agents, attorneys, and tax advisors to protect returns and structure ownership.

Why financing matters for property investors

Investors choose real estate for predictable cash flow and long-term appreciation. Financing changes the math: loan terms, down payment requirements, and interest rates determine whether a property is profitable. These five practical tips help you get financing that supports your investment goals.

1. Know typical loan-to-value and down-payment expectations

Lenders treat investment properties differently from primary homes. Expect higher down-payment requirements and stricter underwriting. Many conventional and portfolio lenders commonly require larger down payments and stronger credit for investment loans. Ask lenders about required loan-to-value (LTV) limits for the loan products you're considering.

2. Match the loan product to your strategy

There are more loan options now than a decade ago. Standard choices include fixed-rate mortgages, adjustable-rate mortgages (ARMs), and interest-only loans. Investor-specific products such as DSCR (Debt Service Coverage Ratio) loans, portfolio loans, and short-term bridge or "hard money" loans exist for fix-and-flip or cash-flow strategies. Choose the product that supports your holding period, risk tolerance, and cash-flow plan.

3. Prepare documentation and expect tighter underwriting

Lenders want to see a clear plan for the property: projected rent, expenses, renovation budgets, and exit strategy. Have recent personal and business tax returns, bank statements, and property pro forma ready. Many lenders also require proof of reserves (several months of mortgage payments) for investor loans.

4. Shop broadly and compare total costs

Compare offers from national banks, regional banks, credit unions, mortgage brokers, and online lenders. Don't focus only on headline interest rates. Compare APRs, lender fees, points, prepayment penalties, and how rental income is treated in underwriting. Get Loan Estimates from multiple lenders and run the numbers on cash flow and return-on-equity.

5. Use professionals and protect yourself

Work with an agent or loan officer who has experience with investment properties. Consult an attorney for ownership structure (LLC vs. personal title) and a tax professional about deductions and passive activity rules. A broker can expose you to more lenders, and an attorney can help with purchase contracts and tenant-related liability.

Final checklist before you apply

  • Confirm your credit score and resolve any errors.
  • Prepare 12-24 months of documentation.
  • Build reserves for vacancies and repairs.
  • Compare loan estimates, not just rates.
  • Consult a tax or legal advisor about ownership and tax implications.
Financing is a tool that shapes returns. Be deliberate about the loan you choose, document your plan, and shop for terms that fit how long and how actively you'll manage the investment.

FAQs about Property Investment Loans

How much down payment do lenders usually require for investment properties?
Investment loans typically require larger down payments than primary-home mortgages. Many lenders expect significantly higher equity - ask each lender about their minimum loan-to-value (LTV) for investor loans.
What is a DSCR loan and when does it make sense?
A DSCR (Debt Service Coverage Ratio) loan underwrites the loan based on the property's income relative to debt payments rather than the borrower's personal income. It makes sense for investors who rely on rental income and want underwriting that focuses on cash flow.
Should I hold investment property in an LLC?
Holding property in an LLC can limit personal liability, but it may affect loan terms and require personal guarantees. Consult a real estate attorney and tax advisor to weigh legal protection against potential financing trade-offs.
Can I finance multiple investment properties at once?
Yes, but lenders consider the aggregate exposure and your overall debt-to-income. Some lenders offer portfolio loans for multiple properties, while others limit the number financed per borrower.
What’s the best way to compare lenders?
Request Loan Estimates from several lenders, compare APRs and fees, evaluate how each treats rental income in underwriting, and consider lender experience with investor loans.