Rental-property financing can help an investor purchase, refinance or improve a non-owner-occupied property.
Potential options include:
The right program depends on:
Rental-property mortgage terms are program-, lender-, state-, borrower- and property-specific. All loans are subject to credit, assets, rent, appraisal, title, insurance and final approval.
Potential sources:
Current agency maximums can permit:
Private products vary.
Conventional investment-property transactions generally require reserves, with additional requirements when the borrower owns multiple financed properties.
Potential vesting:
A DSCR loan can avoid traditional personal-income qualification but still requires underwriting and documentation.
A rental-property loan is financing secured by real estate that the borrower does not intend to occupy as a primary residence.
Uses agency-style underwriting.
The lender can evaluate:
Focuses on property rent compared with a lender-defined monthly property payment.
The lender holds or privately sells the loan under its own guidelines.
| Option | Primary Qualification | Typical Property | Entity Vesting | Main Tradeoff |
|---|---|---|---|---|
| Conventional | Personal income, DTI and rent | One-to-four units | Individual or eligible trust | Agency property-count and reserve rules |
| DSCR | Property rent and payment | One-to-four units; lender-specific | LLC often possible | Higher pricing and possible prepayment penalty |
| Jumbo | Personal income or portfolio method | Higher-balance one-to-four units | Lender-specific | Larger reserves and stricter terms |
| Bank Statement | Deposits and business cash flow | Residential rental | Lender-specific | Expense factor and higher pricing |
| P&L | Business profit analysis | Residential rental | Lender-specific | CPA or third-party documentation |
| Asset Based | Eligible liquid assets | Residential rental | Lender-specific | Large asset requirement |
| Bridge | Property and exit strategy | Acquisition or renovation | Often entity eligible | Short term and higher cost |
| Commercial Multifamily | NOI, DSCR and debt yield | Five or more units | Entity common | Commercial appraisal and balloon risk |
For financing comparisons organized by investment strategy, review Investor Loans.
Current Fannie Mae standard DU maximum LTVs generally include:
| Transaction | Units | Maximum LTV |
|---|---|---|
| Purchase | 1 | 85% |
| Purchase | 2–4 | 75% |
| Limited Cash-Out Refinance | 1–4 | 75% |
| Cash-Out Refinance | 1 | 75% |
| Cash-Out Refinance | 2–4 | 70% |
These are maximum agency parameters—not guaranteed approvals.
A lender can require:
DSCR stands for Debt Service Coverage Ratio.
A common private-lender concept is:
Qualifying monthly rent ÷ covered monthly property payment
The payment can include:
The lender decides:
Potential items:
A non-owner-occupied rental-property loan can be treated as business-purpose credit.
Review:
The lender can review:
A common conventional calculation uses:
75% of gross qualifying rent
The 25% reduction accounts for vacancy and maintenance.
The lender then compares the result with:
Can be added to qualifying income.
Can be included as a liability.
Uses the lender’s defined qualifying rent and payment.
The lender’s qualifying rent is not the same as:
Potential current maximum:
LTV depends on:
Can include:
Down payment and reserves are separate.
Personal gifts are not allowed on a Fannie Mae investment-property mortgage.
Use documented eligible borrower funds.
Current Fannie Mae DU guidance generally requires six months of reserves.
Current additional reserve calculations can use:
Current Fannie Mae policy generally permits up to ten financed properties for an eligible DU investment-property transaction.
Private lenders can use:
Potentially acceptable:
Confirm discounting and withdrawal rules.
Selected DSCR and portfolio programs can permit an LLC.
Potential documents:
Ask:
Generally closes to eligible individual borrowers or qualifying trusts.
Do not assume conventional investment financing can close in an LLC.
An LLC borrower can still require a personal guaranty.
Ask whether the loan is:
LLC ownership does not automatically protect the guarantor from loan liability.
Consult qualified legal and tax professionals.
A short-term rental can be financed under selected:
Potential items:
Verify:
Obtain a policy that covers the actual rental use.
A high online revenue estimate does not establish:
Generally requires commercial multifamily financing.
Potential concerns:
Contract rent before vacancy.
Allow for:
Include:
Income after operating expenses and before mortgage debt service and income taxes.
Mortgage principal and interest, plus other covered financing payments.
NOI minus debt service.
Annual NOI divided by value or purchase price.
Annual pre-tax cash flow divided by total cash invested.
Model:
A lender approval is not an investment recommendation.
Potential goals:
Potential uses:
Can finance eligible acquisition and improvements.
Short-term financing for:
Potential exit:
Future refinance depends on:
Potential items:
Use an approved secure portal.
Do not email unencrypted:
Confirm:
Compare:
Obtain:
Confirm:
Determine:
Confirm before contract or closing.
Include:
Compare:
A conventional preapproval and a business-purpose DSCR term sheet are not identical.
Review:
The lender orders the required valuation.
The lender verifies:
Confirm:
Maintain:
Programs differ.
Use accurate occupancy.
Second-home rules are different.
Their single-family purchase programs require primary occupancy.
Eligible agency maximum can reach 85% LTV.
The lender can require more.
Conventional calculations commonly use a vacancy factor.
Expenses matter.
Underwriting still applies.
It can affect sale or refinance.
A personal guarantee can remain.
Due-on-sale and insurance issues can apply.
Current Fannie guidance does not allow personal gifts.
Cash to close is separate.
Property count and reserves depend on complete data.
It generally needs commercial financing..
Verify local and HOA rules.
Obtain independent support
The lease and local laws matter.
A rental or short-term-rental policy is different.
Purchase can trigger reassessment.
Roof, HVAC and turnover affect returns.
Vacancy and repairs occur.
Rates, value and lender rules can change.
Appraisal, title and property issues can delay closing.
A personalized review can help determine:
Rental-property and investment-property loan programs are lender-, borrower-, entity-, state- and property-specific. Down payment, LTV, credit, rental-income calculation, DSCR, reserves, loan amount, property count, entity vesting, recourse, guaranty, prepayment penalty, appraisal, insurance, rate, points, fees and closing time vary. A positive rent estimate or DSCR does not guarantee approval or investment performance. Rental ownership involves vacancy, repair, tenant, insurance, tax, legal and market risk. All loans are subject to final underwriting and property approval. This page is educational and is not legal, tax, securities, insurance, landlord, investment or financial advice or a commitment to lend. Equal Housing Opportunity.
It is financing secured by a property intended for rental rather than borrower occupancy.
No.
DSCR is one rental-property financing category.
It depends on program, units, property and borrower.
Current Fannie Mae maximum LTV for an eligible one-unit investment-property purchase is 85%.
A non-owner-occupied two-unit conventional purchase is generally limited to 75% LTV under current Fannie Mae standard DU rules.
Owner-occupied financing uses different rules.
Yes under applicable documentation and calculation requirements.
Not necessarily.
Agency calculations commonly use 75% of gross lease or market rent.
It compares lender-defined qualifying rent with the covered property payment.
There is no universal minimum.
Selected DSCR, bank-statement, P&L or asset-based programs may not require traditional tax-return income qualification.
Generally yes.
Some do.
Review the exact schedule.
Selected DSCR and portfolio lenders permit it.
Agency conventional eligibility differs.
Not automatically.
Current Fannie Mae DU policy generally allows up to ten for an eligible investment-property transaction.
Private lenders differ.
Current Fannie Mae DU guidance generally requires six months for an investment-property transaction, plus additional reserves for other financed properties.
Current Fannie Mae guidance does not allow personal gifts on investment-property mortgages.
Private programs vary.
FHA purchase financing requires principal-residence occupancy.
An owner can potentially occupy one unit of a multi-unit property and rent the others.
VA purchase financing requires eligible borrower occupancy.
USDA single-family guaranteed financing requires primary residence and is not for an income-producing rental property.
Potentially under selected programs when the use is legal, insurable and lender-eligible.
Selected lenders permit it using lender-specific documentation.
Potentially, but the unit and project must qualify.
It generally requires commercial multifamily financing.
Yes under eligible conventional, DSCR, jumbo, portfolio or commercial programs.
It depends on value, LTV, seasoning, loan balance, property and lender.
Investment-property pricing is generally less favorable than comparable principal-residence pricing.
Non-owner-occupied rental-property credit is commonly treated as business-purpose under Regulation Z’s official commentary.
Disclosure format can differ for business-purpose loans.
Request a complete written term and fee summary.
No.
Rental income and expenses have tax-reporting requirements.
No.
No.
Loan Officer / Branch Manager
NMLS #1396861 · DRE #00853403
E Mortgage Capital, Inc. · NMLS #1416824
Rodney Rose helps real estate investors compare conventional investment-property, DSCR, jumbo, bank-statement, P&L, portfolio, renovation and refinance options.
Last reviewed: July 25, 2026
