Who it is for
- Buyers of 1–4 unit rentals they will not occupy
- Investors choosing between conventional and DSCR qualification
- Landlords refinancing into better terms
- First-time investors buying their first rental
Typical Investment Property Loan Requirements requirements
| Down payment (conventional) | Typically 15% for 1-unit, 25% for 2–4 units |
|---|---|
| Minimum credit score | Typically 620–680 conventional; 620–680 DSCR |
| Max DTI (conventional) | Typically 45–50% with rental income counted |
| Rental income credit | Usually 75% of market rent or lease, minus the PITIA, added to income |
| Reserves | Typically 6 months per property; more across a portfolio |
| Landlord history | Two years of landlord experience often needed to count departing-residence rent |
| DSCR alternative | Qualify on rent alone with 20–25% down, no personal income docs |
| Occupancy | Non-owner-occupied; misrepresenting occupancy is mortgage fraud |
Figures are typical market ranges as of October 2026. Actual terms depend on the lender, your credit, the property and the program, and are confirmed on your Loan Estimate or term sheet.
How it works
- Choose your qualification path: conventional if your income and DTI are strong, DSCR if they are not.
- Get the market rent from a lease or appraiser rent schedule; lenders use 75% of it on conventional files.
- Budget 15–25% down plus closing costs and six months of reserves per property.
- Keep the property non-owner-occupied in fact and on paper; occupancy fraud carries criminal exposure.
- If you own several rentals, model the portfolio DTI; each new property’s reserves stack up.
Pros and cons
Advantages
- Conventional path offers the lowest investor rates
- DSCR path needs no income documentation
- Rental income counts toward qualification
- LLC vesting available on DSCR and many investor programs
Trade-offs
- 15–25% down is standard
- Reserves stack across every property you own
- Rental income is discounted 25% before counting
- Higher rates and fees than owner-occupied loans
Documents you’ll need
- Standard income and asset documents
- Lease agreements for each rental owned
- Two years of tax returns with Schedule E for existing landlords
- Appraiser rent schedule (Form 1007/1025) for the subject property
- HOA documents and insurance for condos
- Entity documents if vesting in an LLC
Investment Property Loan Requirements FAQ
How much down do I need for an investment property?
Typically 15% for a one-unit conventional purchase and 25% for 2–4 units. DSCR loans usually want 20–25% down.
How do lenders count rental income?
On conventional loans, usually 75% of the lease or market rent minus the full PITIA is added to your income. On DSCR loans, the rent-to-payment ratio is the whole qualification.
Can I use projected rent on a vacant property?
Yes. Lenders use the appraiser’s market-rent estimate when there is no lease, on both conventional and DSCR files.
Do I need landlord experience?
Conventional guidelines often want two years of landlord history before counting rent on a departing primary residence. DSCR loans do not require experience.
How many investment properties can I finance conventionally?
Fannie Mae caps most borrowers at 10 financed properties, with tighter rules on properties 7–10. DSCR loans generally have no cap.
Can I live in the property part-time?
Not on an investor loan. Non-owner-occupied means you do not live there; a property you occupy is a primary or second home with different, usually better, terms.
Should I buy my first rental with conventional or DSCR?
If your W-2 income is strong and your DTI has room, conventional usually prices better. If you are self-employed, maxed on DTI, or past 10 financed properties, DSCR is the cleaner path. Many investors start conventional and switch to DSCR as the portfolio grows.
How do lenders treat my current home when I buy a rental?
Your primary residence payment stays in your DTI in full. For the new rental, they add 75% of the market rent minus the new PITIA to your income. If you are converting your current home to a rental, most lenders want landlord history or an existing lease before counting that rent.
What are the tax implications of an investment property mortgage?
Mortgage interest, property taxes, insurance and depreciation are generally deductible against rental income. The loan itself does not create taxable income, but how you hold the property, personally or in an LLC, affects your tax picture. Confirm the details with your CPA.
How Investment Property Loan Requirements compare
| Investment Property Loan Requirements | Investment Property Loans | DSCR Loans | Conventional Loans | |
|---|---|---|---|---|
| Best for | Buyers of 1–4 unit rentals they will not occupy | Buying your first or next rental property | Investors whose tax returns show low income after write-offs | Buyers with good credit and steady income |
| Down payment | Typically 15% for 1-unit, 25% for 2–4 units | , | 20–25% down; up to 80% LTV on purchase | 3% (eligible first-time buyers), 5%+ otherwise; 15–25% on investment property |
| Credit | Typically 620–680 conventional; 620–680 DSCR | , | Typically 620–680 (some programs 600) | 620 |
| Income docs | , | , | , | , |
Typical ranges, your Loan Estimate or term sheet confirms actual terms.
Coming soon: a 2-minute walkthrough from our loan team.
Related programs
Investment Property Loans
An investment property loan finances a 1-4 unit rental you do not live in.
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).
Conventional Loans
A conventional loan is a mortgage not insured by the government that follows Fannie Mae or Freddie Mac guidelines.