Rental Property Financing Options

Financing shapes the deal

Two investors can buy the same property at the same price and have very different returns, because the financing is different. Understand your options before you shop.

The common options

• Conventional investment mortgage. 20–25% down, market rates, strict qualifying. The baseline.
• DSCR loans. Qualify on the property's cash flow, not your income. Useful for investors with multiple properties.
• Portfolio lenders. Local banks and credit unions that keep the loan. More flexible, often relationship-based.
• Seller financing. The seller carries the note. Rare, but powerful when available.
• Partnerships. You bring the deal or the management; a partner brings the capital.
• House hacking. Live in one unit, rent the others. Owner-occupant financing on an investment.

The trade-offs

• Lower down payment usually means higher rate or mortgage insurance.
• Interest rate affects cash flow more than price over time.
• Amortization — a 30-year term cash flows better than 15, but builds equity slower.

The principle

Match the financing to the strategy. A buy-and-hold cash-flow property wants a different loan than a fix-and-flip. The cheapest money isn't always the right money.