Investment Property Loan Requirements
October 20, 2026
To get an investment property loan, you'll generally need stronger credit, more equity and more cash reserves than for a home you live in, plus documentation of any rental income you want to count. Most investors use a conventional loan that follows Fannie Mae or Freddie Mac rules. FHA and VA loans require you to live in the home, so they only work for investors buying a two-to-four-unit property and living in one unit.
Conventional investment loan requirements. Lenders look at your credit score, debt-to-income ratio, equity in the property and reserves. Investment loans carry loan-level price adjustments, so pricing is generally higher than for a primary residence, and the maximum loan-to-value is lower, especially for two-to-four-unit properties. Fannie Mae requires reserves measured in months of the property's housing payment (principal, interest, taxes, insurance and association dues, or PITIA), plus additional reserves if you finance other properties, and it limits how many financed properties one borrower can have. Rental income can help you qualify. Lenders typically use Schedule E from your tax returns for properties you already own, or a lease or appraiser's rent schedule for a new purchase, and they count only part of the gross rent to allow for vacancies and expenses.
Other financing options. DSCR loans qualify you using the property's rent compared with its payment instead of your personal income, and they're popular with investors who have complex tax returns or several properties. Bank-statement and asset-based non-QM loans serve self-employed investors. Portfolio loans from banks or credit unions follow the lender's own rules. Bridge and hard-money loans are short-term options for quick purchases or renovations, usually at higher cost. Non-QM and business-purpose loans often carry prepayment penalties and different consumer protections, so read the terms carefully. Many investor loans can close in an LLC's name, though you may be asked to sign personally. Note that loans to buy rental property you won't live in are generally treated as business-purpose under federal disclosure rules, so ask for a Loan Estimate or comparable written fee sheet anyway.
How to prepare and what to ask. Gather two years of tax returns with Schedule E, leases for any current rentals, statements showing reserves after closing, and mortgage statements for every property you own. Ask: How do you count rental income on this property? How many months of reserves do I need, including for my other properties? Is there a prepayment penalty? What would this look like as a DSCR loan instead? Can I refinance later, and what seasoning applies? Never claim an investment property as your primary residence or second home to get better pricing. Occupancy misrepresentation is mortgage fraud. Talk with a tax professional or attorney about ownership structure and taxes. Can you use a cash-out refinance on a rental to buy the next one? Often yes, within the lender's loan-to-value and seasoning limits, but the cash-out adds its own pricing adjustments, so compare it with a HELOC or DSCR option.
Investment property loans call for more equity, more reserves and documented rental income, and they're priced higher than owner-occupied loans. Conventional loans are the standard route, and DSCR, non-QM, portfolio and bridge loans fill specific gaps. Compare the reserve, rental-income and prepayment terms in writing. Sources: Fannie Mae Selling Guide (B2-2-03, B3-3.1-08, B3-4.1-01); Fannie Mae Eligibility Matrix; 12 CFR 1026.3(a). General education only. LoFi Rate is an independent matching service, not a lender.