It varies by loan type. Conventional investment loans typically require a score of 680 or higher. DSCR loans may be available for borrowers with scores as low as 620. Hard money loans are the least credit-sensitive, as they are primarily based on the property's value, but a lender may still have a minimum score requirement (e.g., 600).

Generally, you should expect to put down 20-30% of the purchase price. Conventional loans often require at least 25%. Some programs may offer lower down payments, but 20% is a standard minimum for most investment property loans.

The primary difference is the underwriting basis. A conventional loan qualifies you based on your personal income, credit, and debt-to-income ratio. A DSCR loan qualifies you based on the investment property's ability to generate enough income to cover the mortgage payment, without requiring personal income verification like tax returns or pay stubs.

Yes, absolutely. Self-employed individuals often find DSCR loans particularly appealing because they don't require the extensive income documentation that can be challenging for business owners. You can also qualify for conventional loans, but you will need to provide at least two years of business and personal tax returns to document your income.

Fannie Mae and Freddie Mac generally limit an individual to financing 10 properties. However, there is no limit when using other types of financing like DSCR, hard money, or portfolio loans. Many professional investors own dozens or even hundreds of properties using these commercial-style loan products.

Yes. Lenders view loans for non-owner-occupied properties as higher risk because a borrower is more likely to default on an investment property than their primary home during financial hardship. To compensate for this risk, interest rates are typically 0.5% to 2.0% higher than for an equivalent owner-occupied mortgage.

A fix-and-flip loan is a type of short-term financing, usually a hard money or bridge loan, used to purchase and renovate a property with the intent to sell it quickly for a profit. These loans are often structured to fund both the acquisition and a portion of the renovation budget, with the loan amount based on the property's After Repair Value (ARV). Our fix and flip loans guide offers more detail.

Yes. Financing for short-term rentals is widely available. Many lenders offer DSCR loans specifically for properties listed on platforms like Airbnb and VRBO, using projected short-term rental income to qualify the loan.

Many investors choose to hold properties in a Limited Liability Company (LLC) for liability protection. Conventional loans must typically be made to an individual, while most commercial-style loans (DSCR, hard money, portfolio) can and often must be made to a business entity like an LLC. It's best to consult with a legal and tax advisor to determine the best structure for your situation.

Closing times vary greatly. Hard money and bridge loans are the fastest, often closing in 7-14 days. DSCR loans typically take 21-30 days. Conventional loans are the slowest, usually requiring 30-60 days to close.

A prepayment penalty is a fee charged by a lender if you pay off the loan before a specified period. They are common on DSCR and other non-QM loans, typically lasting for the first 1-5 years of the loan term. This fee compensates the lender for the loss of future interest payments. Conventional loans generally do not have prepayment penalties.

Yes, but you will need a specific type of financing called a construction loan. These are short-term loans that fund the project in stages (draws) as work is completed. Once construction is finished and the property receives a certificate of occupancy, the construction loan is typically refinanced into a permanent long-term mortgage.

Points, or origination points, are an upfront fee paid to the lender to originate the loan. One point is equal to 1% of the total loan amount. Hard money and bridge loans often have higher points (2-5) compared to conventional loans (0-1).

For smaller residential properties (1-4 units), a formal business plan is usually not required. However, for larger commercial projects, fix-and-flips, or new construction, the lender will want to see a detailed plan that includes your renovation budget, timeline, projected income/ARV, and your exit strategy (selling or refinancing).

It is very difficult to get a 100% LTV loan from a single source. Most lenders require a down payment. However, investors can achieve a "no money down" deal by combining financing sources, such as using a hard money loan for the bulk of the purchase and a private loan from another individual or a business line of credit to cover the down payment and closing costs.