Your Financing Choice Determines Your Returns
Two investors buy identical $300,000 properties. One uses conventional financing at 7% with 20% down. The other uses hard money at 12% with 10% down.
Same property. Different cash flow by $400/month. Different risk. Different total return over 5 years.
Your financing choice isn't secondary to your property choice — it's equally important. This guide compares every investment property financing option available in 2026.
Compare financing options for any investment property — rates, payments, and qualification requirements.
Check your financing options Free · No signup · Any US property6 Financing Options Compared
| Option | Down Payment | Rate (2026) | Qualification | Best For |
|---|---|---|---|---|
| Conventional | 20–25% | 6.5–7.5% | W-2 income, 720+ credit | W-2 investors building portfolio |
| FHA | 3.5% | 6.0–7.0% | 580+ credit, owner-occupy 12mo | House hackers, first-time buyers |
| DSCR | 15–25% | 7.5–9.0% | Property income only | Self-employed, no W-2 |
| Hard Money | 10–15% | 10–15% | Property value + experience | Flippers, short-term holds |
| Portfolio | 20–30% | 7.0–8.5% | Relationship-based | Investors with 5+ properties |
| Seller Financing | Negotiable | 6–10% | Seller agreement | Unique situations, off-market deals |
Conventional Loans
The standard for investors with W-2 income and good credit. Lowest rates, highest qualification bar.
- Down payment: 20–25% for investment property (vs. 3–5% for primary residence)
- Rates: 0.5–1% higher than primary residence rates
- Limit: 10 financed properties max
- Credit: 680+ minimum, 720+ for best rates
- Income: 2 years W-2 or self-employed tax returns required
FHA Loans
The lowest barrier to entry — if you're willing to live in the property.
- Down payment: 3.5% on 2–4 unit properties
- Requirement: Must occupy one unit for 12 months
- Credit: 580+ for 3.5% down, 500–579 for 10% down
- Key advantage: You can repeat with each new primary residence
→ See the house hacking guide for the full FHA strategy.
DSCR Loans
Qualify on the property's rental income, not yours. The go-to for self-employed investors.
- Down payment: 15–25%
- DSCR requirement: 1.0–1.25 minimum (rent must cover mortgage)
- No W-2, no tax returns required
- No property limit — keep buying as long as each property qualifies
- Rates: 0.5–1.5% higher than conventional
→ Check your DSCR ratio with the DSCR loan calculator.
Hard Money
Short-term financing for flippers. Fast closing (1–2 weeks) but high costs.
- Down payment: 10–15%
- Rates: 10–15% interest-only
- Term: 6–12 months (extendable to 18 months)
- Best for: Flips where you'll sell or refinance within a year
- Warning: Monthly costs are brutal on a property you're holding long-term
Portfolio Lending
Local banks and credit unions that keep loans in-house instead of selling to Fannie Mae. Flexible qualification.
- Down payment: 20–30%
- Rates: 7.0–8.5%
- Qualification: Based on relationship with the lender and overall financial picture
- Best for: Investors who've hit the 10-property conventional cap
Seller Financing
The seller acts as the bank. You make payments directly to them.
- Down payment: Negotiable (typically 10–20%)
- Rates: 6–10%
- Term: 3–5 year balloon (then refinance)
- Best for: Off-market deals, properties that don't qualify for traditional financing
"Used conventional for my first 4 properties, then switched to DSCR for properties 5 through 8. No income docs, no W-2 headaches. The 1% higher rate is worth it for the ease of qualifying."
→ Read our financial metrics guide to understand how loan terms affect your ROI, and our 15-minute deal analysis for evaluating any property.