An investment property earns a profit for its investor. Investment property loans are a tool for an investor to maximize their returns by leveraging the down payment, the length of the payback terms, and the interest rate. Investors can further improve their returns by using investment loans to build where there is a need for affordable houses to rent, for instance, or to rehab a property to increase its value and cash flow.
However, investment properties are considered higher risk than residential loans for a personal residence. The logic behind this is that if something goes wrong and the property loses money for the investor, it’s easier to walk away from a property if it's not your residence.
We reviewed 19 lenders and their loan programs to select the best investment property loan options based on what property types they can be used for, their down payment requirements, their current interest rates and APRs, loan size minimums and maximums, and the length and complexity of the underwriting process. Here are our top picks.
6 Best Investment Property Loans of 2021
Best Overall : Quicken Loans
Why We Chose It: We chose Quicken Loans as our best overall investment property lender because they lend nationwide, offer a wide variety of loan types, and make applying for a mortgage online very easy for the borrower. Quicken provides competitive rates as well, which helps solidify its position as the best overall mortgage lender.
Online application and live agents to talk to
Fast, easy, and paperless income verification
Custom fixed-rate loan terms that are between eight and 29 years (standard 30-year mortgage also available)
Down payment of as low as 3% on conventional mortgages
Quicken Loans doesn't offer home equity loans or HELOCs
No branches to visit in person
Doesn’t consider alternative credit data, only credit scores and debt-to-income ratio
Formed as a brick-and-mortar lender in 1985, then moving online between 1999 and 2001 as Rocket Loans, Quicken Loans’ rise paralleled the growth of the internet.
Quicken Loans is our best overall investment lender because they are easy to use for investors nationwide. They offer a large portfolio of loan products that can be tailored to your needs when you complete their online application.
Quicken Loans lends on residential and multi-unit investment properties with fixed- and adjustable-rate home loans, mortgage refinancing, FHA, USDA, and VA loans, and jumbo loans for higher-priced homes.
On conventional loans, Quicken offers down payments as low as 3% if you qualify for their agency loans. However, if your down payment is less than 20% you'll have to pay PMI.
The current mortgage rates for a 30-Year Fixed loan carry a rate of 3.25% and an APR of 3.498%. For their 15-Year Fixed loan product, the rate is 2.625%, with an APR of 3.084%.
Keep in mind, you can only get up to 10 conventional mortgages that offer these attractive rates and downpayment options as stipulated by Fannie Mae guidelines. After you hit that ceiling, you’ll need to turn to bank alternate financing such as private equity and private or hard money lenders.
The loan minimum depends on the property type, but the loan maximum is up to $2 million for their jumbo loan program. Rocket Mortgage now acts as the online platform and loan processor for Quicken Loans.
Rocket is the first lender to offer eClosings in all 50 states. 98% of their mortgages use Rocket technology that offers a fully automated and fast process.
Best for Veterans : Veterans United Home Loans
Why We Chose It: We chose Veterans United Home Loans as our best investment property lender for veterans because the firm specializes in VA-backed mortgages with experts who understand this loan program (and their specific consumer base) better than anyone else.
Offers 24/7 customer service over the phone
Has online application and pre-qualification
Employs advisors from each branch of the armed forces
Doesn't offer home equity loans or HELOCs
Information on FHA, USDA, and conventional loans is harder to find on its website
Founded in 2002, Veterans United is a full-service lender that specializes in VA loans for qualifying veterans, active service members, and their spouses. They are one of the largest VA mortgage lenders in terms of volume in the United States.
Investors benefit from flexible qualification guidelines, lower rates, and monthly payments, no down payments, and no private mortgage insurance. Veterans United has VA loans for as little as 0% down, and they understand how to make the VA loan work for an investor and still remain within the program’s guidelines.
In order for a VA loan to be used on an investment property purchase, it must be a multifamily property no larger than four units, and the investor must live in one of the units. This is a key point, and if you don’t meet this criterion, the VA loan cannot be used for an investment property. If you do follow this rule, however, you will enjoy the low down payment and low rate benefits this government program provides.
Among the products offered are fixed and adjustable-rate mortgages, jumbo loans, refinance loans, and cash-out loans. Loan rates change daily—November 2021 rates ranged from 2.750% to 3.250% with APRs between 3.049% and 3.558% depending on the loan product.
Veterans United does not have a minimum loan amount declared. If the investor is using a VA loan, the VA only guarantees up to the county-specific loan limit. For most counties, the limit is $548,250, but for some high-cost areas, the limit reaches $822,375 for loans financing one unit.
Veterans United underwrites your loan by analyzing your credit score, debt-to-income ratio, cash reserves, and income, and they review the property inspection reports, appraisal, and title search results. Plan on 40 to 50 from start to close. Much of the initial pre-approval stage is completed online.
In order for you to use a VA loan for your investment property, some of the documents you will be asked to provide are a copy of your driver’s license or other government identification, a copy of your DD-214 or Reserve/Guard points statements, a statement of service for active duty borrowers, recent pay stubs and W-2s for the last two years, recent bank statements, and disability award letters.
Best for Single-Family Homes : Citibank
Why We Chose It: We chose Citibank as our best investment property lender for single-family homes because it offers a full toolbox of home loan products for investors, more low down payment options than other lenders, and some of the lowest rates and fees in the industry.
Wide variety of loan options
Provides customizable mortgage rates on its website
Low rates and fees compared to other lenders
Low down payment HomeRun program
Charges a mortgage application fee
Requires help from a mortgage loan officer to complete the loan application online
Founded in New York in 1812, Citibank provides a suite of tools that investors can use for different strategies to finance their single-family home income properties. The bank has mortgages with term lengths from five to 30 years. Both fixed-rate mortgages and ARMs are available. Citibank earned our best for single-family homes ranking because of its breadth of loan terms and its consistently low rates.
Their conventional loans lend up to $548,250 in most of the country and up to $822,375 in some high-cost areas. Above those prices, Citibank can meet your needs with a jumbo loan. Jumbo loans require higher credit scores, but allow borrowers to access larger loans often with higher LTVs, if desired. Conventional mortgage have lower credit score requirements than a jumbo, Citi states you can get a conventional mortgage with a score as low as 620.
Citibank finances residential, multi-unit, and commercial properties for investors who have exceeded the limits on regular mortgages.
Existing Citibank customers benefit from closing cost credits and rate discounts, but they must set up automatic monthly mortgage payments from their Citibank deposit account. Rates change daily—current interest rates are 2.375% and 3.125%, with APRs at 2.653% and 3.301% for 15 and 30-year fixed-rate mortgages respectively. You can qualify for these rates and mortgages as long as you have not exceeded 10 mortgages, the limit set by Fannie Mae. For your 11th investment property purchase, you could consider wrapping your properties into a single blanket loan, where you make one payment applied to the debt on all ten properties combined. Then you would again become eligible for another conventional mortgage which will have lower interest than other options. If you do not consolidate the mortgages, you’ll have to turn to other options such as investor loans, private lenders, or hard money lenders. Generally, these choices have higher interest and often carry prepayment penalties
The underwriting process should take 30 to 60 days. However, Citi doesn't advertise the timeframe. You may start a Citibank mortgage application over the phone, online, or, in some locations, in person. If you start online, you can be connected with a loan officer for pre-approval.
Best for Commercial Property : Lendio
Why We Chose It: We chose Lendio as our best for commercial property loans because their marketplace platform is the easiest way for an investor to fill out one application and receive offers from multiple competing lenders.
Wide variety of financing options and lenders
Personalized guidance and expertise to help you interpret your loan offers
High interest rates on some loans
You have to fill out their online application to see loan terms
Lendio is a free online service for investors where users receive potential commercial loan offers within minutes from the company's marketplace of more than 75 lenders. Over 300,000 loans have been funded through Lendio, giving it a good reputation for success.
A marketplace like Lendio is great for commercial property investors because they can quickly and efficiently shop for the best terms. Unlike other commercial property options, they make the process simple with one application to shop rates.
Lendio lenders underwrite residential, multi-unit, and commercial real estate loans, as well as an array of business loans too. Down payments can be as low as 3.5% if you qualify for one of the agency loans, like FHA. Otherwise, traditional commercial property loan programs require 25% to 30% down.
Interest rates start at 4.25% on the Lendio platform for commercial property loans. Terms range from 20 to 25 years and take a minimum of 45 days to fund. Commercial property loan amounts range from $250,000 to $5 million.
Lendio suggests you have ready the purchase contract, property blueprints, market analysis for the property, project budget and scope of work, and assessment of the property’s existing conditions for an efficient underwriting experience. The online application takes about 15 minutes and is where it all starts, and documents are shared electronically once you have selected a lender.
Best for Ground-Up Construction : Nationwide Home Loans Group, a division of Magnolia Bank
Why We Chose It: We chose Nationwide Home Loans Group as the best construction lender for investors because it combines up to three loans into one closing process, lends in most states, and answers messages seven days a week. Its programs offer the lowest down payment requirements for a ground-up construction loan, and no payments are due during construction.
Up to 100% financing
Staff communicate with you seven days per week
Available in 47 states
Can finance land purchase, construction loan, and permanent mortgage into one rate-locked closing
One combined loan could translate into higher rates on the final permanent mortgage
640 minimum credit score
Full documentation lender
Nationwide Home Loans Group is a division of Magnolia Bank, an independent community bank founded in Kentucky in 1919. The bank has grown its services to lend nationwide and originates over $1 billion in home loans annually.
We rated their ground-up construction loan best because it has a combination of features that no other lender has been able to put together into one program for a single-family residential investment. An investor can buy the land, build the house, and finance the mortgage all with one closing process. During the construction period, investors enjoy enhanced liquidity because they don’t have to make any payments until the home is finished.
If you want to obtain this loan via FHA or VA programs the maximum loan in most counties is $548,250. For everyone, up to $150,000 in land value may be included in your maximum loan amount. Interest rates fluctuate based on the market. Since this is a special product, expect it to be a bit more expensive than a traditional mortgage for a pre-built home. No mortgage payments are collected until the construction is complete.
The lender requires the borrower’s credit score to be at least 640 for this product. You’ll make initial contact online, but the rest of the process is done through email and phone as you exchange documents with your loan processor. In addition to providing a personal financial statement, you’ll need to submit building plans and information about your builder’s credentials. Your loan officer will walk you through exactly what they need depending on the specific details of your project.
Down payments vary depending on the particular loan program. For example, their VA construction loan can be as low as 0% down, and their FHA loan can be as low as 3.5% down. This loan does offer a rate lock while you shop. At the end of your construction period your loan automatically converts to a long-term mortgage without requiring a second closing.
Best for Rehab Loans : LendingOne
Why We Chose It: LendingOne earns our nod for best rehab lender because they are one of the very few commercial lenders that make it easy to get a pre-approval letter, they finance up to 90% loan-to-cost and provide lower rates and fees than their competition.
Pre-approval/proof of funds available online within minutes
Founded by investors to improve upon traditional lenders’ limitations
$150 charge for each draw
Only available for one- to four-unit properties, no commercial
In 2014, Bill Green and Matthew Neisser founded LendingOne in response to their frustrations felt toward the difficult lending environment from rigid bank criteria and the easier, though more expensive, hard money alternatives.
As a direct private real estate lender, LendingOne has become the best rehab lender in the industry because they help investors get what had been missing in the market, such as pre-approval letters and proof of funds, higher leverage, and lower rates and fees.
LendingOne offers fix-and-flip and rehab-to-rent loan products. Down payments range from 10% to 20%. For rehab to rent, they have a 30-year fixed-rate loan as well as 5/1 and 7/1 ARM loans. Their fix-and-flip loans can finance up to 90% of your repair costs. Two years of interest only payments are an option on the fix-and-flip loans too. LendingOne loans on two- to four-unit properties only, including condos and townhouses.
The loan minimum is $75,000. Interest rates and loan terms are underwritten based on your experience, income, credit, and LTV. Their fees are transparent, too. Fees and closing costs apply, but are not on the loan product page. They generally require a credit score of 680, but there may be some variation depending on product and situation.
Additional underwriting requirements are for the investor to have six months of cash reserves, a recent bank statement, a list of properties you already own, a certification that you are buying the property for business or investment purposes, the operating agreement for your business entity, driver’s license, purchase and sale contract, and a lease agreement if the property already has a tenant in place.
LendingOne can fund rehab loans in as little as 10 days, and you can apply online or over the phone.
What Is an Investment Property Loan?
An investment property loan is money you borrow to buy or build a property that has the potential to produce income for you by leasing the space out to a tenant, or by re-selling it after you increase its value.
Investment property loans include construction, purchase, and rehab. Investment property loans are not just for single-family homes. If you want to buy an apartment building or an office tower, you would use an investment property loan.
What Are the Most Common Investment Property Loans?
Investors try to use a conventional mortgage to buy a property with one to four units if they can meet the bank’s criteria because this is where they’ll find the lowest rates and fees.
To buy a home to renovate and resell or lease, investors often turn to private lenders that specialize in this process. Many banks either won’t provide these loans or take too long to close for an investor’s preference, so private money lenders are successful here.
Private and hard money lenders are also helpful when investors want to buy commercial properties like apartment complexes, medical office buildings, or office towers for example. Their terms are more flexible than conventional mortgages and they will work with borrowers who have lower credit scores where banks and credit unions may not.
Is It Hard to Get a Loan for an Investment Property?
Qualifying for an investment property loan is more challenging because lenders view investment properties as a greater risk. Lenders will want to make sure that you earn enough to afford monthly mortgage payments in the worst-case scenario, such as your tenant stops making their payments.
Compared to loans for your personal residence where you may qualify for a 0% or 3% down program, lenders want to see a larger down payment on investment properties, often between 20% to 35%.
To get the best rates and terms, you’ll want to get a traditional mortgage, which is why most of our winners here have come from that sector. However, you can max out at four conventional loans for investment properties. If you want to keep going, you’ll need to convert to private and hard money lenders
Can I Get an SBA Loan for Rental Property?
The SBA 504 loan is the best choice for buying commercial property. Money can be used to buy a building, finance ground-up construction, or rehab an existing building. With the SBA 504 loan, you are likely to have the lowest interest rates and a 25-year repayment term.
Borrowing limits are normally $2 million for commercial property. Key requirements of this loan include the owner must occupy 51% of an existing building or 60% of a new construction building.
How We Chose the Best Investment Property Loans
We reviewed 19 lenders and their loan programs before selecting our award winners. We considered the types of investment property loans they underwrite, down payment requirements, the interest rates and APRs, minimum and maximum funding limits, and the lender’s underwriting process complexity.