Top Real Estate Mortgage Options for Investment Properties

The best mortgage for an investment property depends on your strategy (long-term rental, short-term rental/Airbnb, or scaling with cash-out) and how you want to qualify (personal income vs property cash flow). In most cases, investors choose Conventional 1–4 unit loans for long-term holds, DSCR loans when qualifying based on rental cash flow, cash-out refinance to recycle equity, and jumbo loans for higher-priced properties. If you’re investing in Charlotte, NC (or anywhere we lend nationwide), this guide breaks down each option, typical down payment ranges, and what underwriters look for—so you can pick the right fit and close on time.

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Exploring Real Estate Mortgage Options for Investment Properties

When it comes to financing an investment property, the choices can feel overwhelming. Unlike primary residences, lenders often have stricter requirements for investment properties. This is because they see these loans as higher risk. But don’t worry - there are several mortgage options tailored to different needs and situations.

Here are some of the most common real estate mortgage options you should consider:

• Conventional Loans: These are the most popular and widely available. They usually require a higher credit score and a larger down payment than loans for primary homes. But they offer competitive interest rates and flexible terms.

• DSCR Loans (Debt Service Coverage Ratio): These loans focus on the property’s income potential rather than your personal income. They’re great if you have multiple properties or if your personal income documentation is complicated.

• Cash-Out Refinance: If you already own investment properties, this option lets you tap into your home equity to fund new purchases or renovations.

• Short-Term Rental Loans: Designed for properties you plan to rent out on platforms like Airbnb, these loans consider the unique income streams and risks of short-term rentals.

• Jumbo Loans: For high-value investment properties, jumbo loans cover amounts above conforming loan limits. They often require strong credit and financial reserves.

  
  

Each option has its pros and cons, so it’s important to match your financial situation and investment goals with the right mortgage product.

Which Investment Loan Fits Your Strategy?

• Long-term rental (SFR/2–4 units): Conventional investment loan

• Qualify on rent, not W-2: DSCR loan

• Scale faster using equity: Cash-out refinance

• Airbnb/VRBO income approach: STR-friendly DSCR or conventional (case-by-case)

• High-value property: Jumbo investment loan

Investment property with rental sign

What is the Minimum Down Payment for an Investment Property Mortgage?

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Down payment requirements vary by lender, credit, reserves, and property type—but these ranges are common starting points for investors. A higher down payment can improve pricing and help approvals, especially on STR and jumbo loans.

• Conventional Loans: Typically require at least 15% to 25% down. Many lenders prefer 20% or more to reduce risk.

• DSCR Loans: These can sometimes allow for lower down payments, around 15%, but it depends on the lender and property income.

• Cash-Out Refinance: Usually requires you to maintain at least 25% equity in the property after refinancing.

• Short-Term Rental Loans: Down payments often start at 20%, but some lenders may ask for more due to the higher risk.

• Jumbo Loans: Down payments usually start at 20% but can be higher depending on the loan amount and borrower profile.

  
  

Putting down a larger down payment can help you secure better interest rates and reduce your monthly payments. It also shows lenders you’re serious and financially stable.

If you’re working with a mortgage broker or lender, ask them about specific down payment requirements for your situation. They can help you find options that fit your budget and goals.

How to Qualify for a Mortgage for Investment Property

Qualifying for a mortgage on an investment property is a bit different from buying a primary home. Lenders want to see that you can handle the financial responsibility and that the property will generate income. Here’s what they typically look for:

• Credit Score: Most lenders want a score of 620 or higher, but 700+ is ideal for better rates.

• Debt-to-Income Ratio (DTI): This measures your monthly debts compared to your income. For investment properties, lenders often want a DTI below 45%.

• Reserves: Lenders usually require you to have cash reserves to cover several months of mortgage payments.

• Income Verification: You’ll need to provide proof of income, but with DSCR loans, the property’s income can sometimes substitute for personal income.

• Property Appraisal: The lender will appraise the property to ensure it’s worth the loan amount and can generate rental income.

  
  

What Underwriters Typically Want to See (Investor Files)

• Credit + liabilities (DTI matters on full-doc loans)

• Down payment source + bank statements

• Reserves (months of payments available after closing)

• Lease / rent roll (or STR payout history when applicable)

• Insurance + taxes + HOA so payment is accurate

• Entity docs if buying in an LLC (if applicable)

Preparing your financial documents ahead of time can speed up the approval process. This includes tax returns, bank statements, and proof of rental income if you already own investment properties.

Benefits of Working with a Mortgage Broker for Investment Properties

Navigating the world of investment property financing can be tricky. That’s why working with a mortgage broker can be a game-changer. Brokers have access to multiple lenders and loan products, which means they can find options you might not discover on your own.

Here’s why I recommend considering a mortgage broker:

• Personalized Guidance: They understand your unique financial situation and investment goals.

• Access to Specialized Loans: Brokers often have connections to lenders offering DSCR loans, short-term rental financing, and other niche products.

• Time Savings: They handle the paperwork, communication, and negotiations, so you can focus on your investment strategy.

• Transparent Comparisons: A good broker will explain the pros and cons of each loan option in plain English.

• Consistent Communication: You’ll get regular updates from application to closing, reducing surprises.

  
  

A good mortgage broker can save you time by comparing conventional, DSCR, STR-friendly, and jumbo options in one place—then translating terms (payment, points, reserves, and timeline) into a clear decision.

Mortgage application process for investment property

Tips for Choosing the Right Mortgage for Your Investment Property

Choosing the right mortgage can feel overwhelming, but breaking it down into manageable steps helps. Here are some tips to guide you:

1. Assess Your Financial Situation: Know your credit score, income, debts, and how much cash you have for a down payment.

2. Define Your Investment Goals: Are you looking for long-term rental income, short-term vacation rentals, or flipping properties? Your goals affect the best loan choice.

3. Compare Interest Rates and Terms: Even a small difference in interest rates can save you thousands over time.

4. Consider Loan Flexibility: Some loans allow for easier refinancing or have prepayment penalties. Understand these details.

5. Factor in Closing Costs and Fees: These can add up, so get a clear estimate upfront.

6. Work with Experienced Professionals: A knowledgeable mortgage broker or lender can help you navigate options and paperwork.

   
   

Remember, the right mortgage is one that fits your budget, supports your investment strategy, and gives you peace of mind.

Investment Property Mortgage FAQs

What are the best mortgage options for investment properties?

Conventional investment loans, DSCR loans, cash-out refinance, STR-friendly financing, and jumbo loans are the most common. The right fit depends on your strategy and how you want to qualify.

What is a DSCR loan for an investment property?

A DSCR loan focuses on property cash flow—rent versus payment—often reducing the need for traditional income documentation.

What down payment do I need for an investment property?

It varies by loan type and borrower profile. Many conventional and STR scenarios start around the mid-teens to 20%+ range, while jumbo often requires stronger equity and reserves.

How do I qualify for an investment property mortgage?

Lenders review credit, liabilities, reserves, income (or property income for DSCR), and the appraisal. Having documents ready speeds approvals.

Can I finance a short-term rental (Airbnb/VRBO)?Yes—options may include DSCR and conventional pathways depending on property type, income approach, and lender guidelines.

How does cash-out refinance help investors?

It can convert equity into funds for the next purchase or renovation while maintaining required equity after the refinance.

Why work with a mortgage broker for investment loans?

A broker can compare multiple lenders and loan types, explain tradeoffs clearly, and keep the process moving toward an on-time closing

If you’re choosing between conventional vs DSCR, planning an Airbnb/VRBO rental, or considering cash-out to scale, the smartest next step is an apples-to-apples comparison: payment, cash-to-close, reserves, and timeline. If you want help mapping options for a property in Charlotte or anywhere we lend nationwide, schedule a quick call and we’ll lay it out in plain English.

Taking the time to understand your mortgage options now will pay off in the long run. With the right loan, you’ll be well on your way to building a successful real estate portfolio.

Last updated: February 2026