The details
The honest answer: non-owner-occupied investment loans essentially always require a down payment. DSCR lenders want 20 to 25 percent. Conventional investor loans want 15 to 25 percent. No legitimate lender funds 100 percent of an investment purchase, because the risk math does not work without borrower skin in the game.
The realistic low-cash paths all involve owner occupancy. A VA loan on a duplex or fourplex requires zero down if you live in one unit for at least a year. FHA house hacking needs 3.5 percent down on up to 4 units. Conventional allows 5 percent down on 2 to 4 unit primary residences in some cases. After the occupancy period, you can move out and keep it as a rental.
Other ways to reduce cash to close: negotiate seller concessions toward closing costs, use a gift from family for part of the down payment where program rules allow, or partner with someone who brings the down payment while you manage the deal. Each of these is legitimate and common, none of them is truly zero down.
Run it yourself
Rent vs Buy Calculator
Is buying cheaper than renting?
Mortgage Payment Calculator
Full monthly payment, PITI
Related loan programs
DSCR Loans
A DSCR loan is an investment-property mortgage that qualifies you on the property’s rental income divided by its monthly payment (the debt service coverage ratio).
VA Loans
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs that lets eligible veterans, active-duty service members and certain surviving spouses buy with no down payment and no monthly mortgage insurance.
FHA Loans
An FHA loan is a government-insured mortgage that allows 3.5% down with a credit score of 580 or higher, or 10% down with a score from 500 to 579.
Conventional Loans
A conventional loan is a mortgage not insured by the government that follows Fannie Mae or Freddie Mac guidelines.
Frequently asked questions
Is there a true 0 down investor loan?
No legitimate program funds 100 percent of a non-owner-occupied purchase. Zero-down options like VA require you to live in the property.
What is house hacking?
Buying a 1 to 4 unit property, living in one unit, and renting the others. FHA needs 3.5 percent down, VA needs zero. The rental income offsets your housing cost.
Can I use a HELOC for the down payment on a rental?
Yes, many investors use a HELOC on their primary home for investment down payments. The HELOC payment counts in your debt-to-income ratio, so run the full picture first.
Do DSCR loans ever allow less than 20 percent down?
Rarely. A few programs go to 15 percent for exceptional profiles, but 20 to 25 percent is the standard. Below that, the pricing gets punitive.
Can seller credits cover my whole down payment?
No. Seller credits can cover closing costs but generally cannot fund the down payment itself on investment loans. Program rules cap credits as a percentage of the price.
More answers
- Is there such a thing as a free mortgage?
- Can you get an interest-free mortgage?
- What is a no-closing-cost mortgage?
- What is the difference between lender-paid and borrower-paid compensation?
- What does “lender-backed” mean on a mortgage?
- Mortgage broker or bank: which is better?
- How is DSCR calculated for a mortgage?
- What DSCR ratio do I need to qualify?