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The Top 10% Down Investment Property Loans

Reviewed by Ty Crandall

March 1, 2024


Investment Property Loans 10 Percent Down Credit Suite

Looking for investment property loans 10 percent down? If you’re a real estate investor, then the less money down you have to provide, the better. Investment properties are expensive, and their care, repair, property management, and maintenance are, too.

The more you can keep in cash reserves and use to fix up the place, the easier it is to turn it around and sell it.

What Is an Investment Property Loan?

In the same way that you can take out a mortgage to buy a home for yourself, you can do the same thing if you plan to invest in a rental property. 

It may be a good investment to purchase apartment buildings so you have revenue generated from the rent each month. But you might need financial assistance to do so. That’s when an investment property loan is a good idea.

Investment property loans are a tool for a real estate investor to maximize their returns by leveraging the down payment, the length of the payback terms, and the interest rate. 

Investors can also improve their returns by using an investment loan to build where there is a need for affordable houses to rent, for instance. Or they can use it to rehab an investment property to increase its value and cash flow.

Borrowers may choose an investment property loan to get the capital they need in order to rebuild an investment property from the ground up, or just to repair some of it and then flip it.

With conventional lending, many investors assume they need to put 20 percent down. However, this rule is just for homebuyers hoping to avoid private mortgage insurance.

But even with conventional loans, you may be able to get investment property loans 10 percent down.

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How Investment Property Loans Work

Just like a personal mortgage works, an investment property loan provides the funds borrowers need to purchase a house, multifamily property, commercial property, or commercial real estate. Often you are expected to put down a percentage of the sale price.

The rental property being bought serves as collateral for the loan. If you cannot pay the loan in full, the mortgage lender has the right to seize the property to sell and cover your debt.

Applying for investment property loans requires some extra steps beyond a regular mortgage. This is because you have to provide more information on the property. Look for a lender that streamlines this process so it’s efficient and easy to complete. 

Having the necessary paperwork at hand also can speed up the process. This includes W-2s and bank statements. It also includes leasing or rental income statements on the property. 

Plus any documentation of the borrower’s financial assets, like a stock portfolio, retirement account statements, or the like. When looking for investment property loans, borrowers should check on how long it takes to close, too.

Interest rates, mortgage rates, the credit score you need to have for approval, and the payment requirement should all be considerations.

How Much Do You Need to Put Down on an Investment Property?

Rental property down payment requirements are going to vary. This will depend on several factors related to an investor’s financial standing. When setting down payment requirements, many lenders check an investor’s debt-to-income ratio and credit score. 

Therefore, investors with a credit score above 700 may be able to make a down payment as low as 15 percent. However, investors with a credit score below 640 will likely have to make a down payment of around 25 percent.

Another factor influencing the amount required for a down payment is whether the real estate investor plans to live in the property or not. If you buy a duplex or multifamily property and live in one of the units, you may be able to provide a smaller down payment. 

A loan option like an FHA loan program allows investors to put as low as 3.5 percent down on a primary residence with up to four units. In short, the down payment amount will depend on an investor’s financial background, lender requirements, and the overall investment type.

Alternatively, you can consider getting down payment assistance from retail lenders like Rocket Mortgage or Quicken Loan if you don’t have enough cash. You can even source quick cash through a private money loan from private lenders, such as an organization.

Two factors help keep down payments low—good FICO scores and electing to live in the investment properties. To qualify, you’ll need to satisfy a lender’s approval criteria. This also means stricter cash reserve requirements.

Can I Find an Investment Property Loan with 10 Percent Down?

Yes! There are some providers. But keep in mind that qualifying is going to be more difficult. The government has two such programs. However, both of these are ostensibly for the person borrowing the capital to live in the rental property.

If you can, then you can essentially use the Fannie Mae HomeReady Mortgage or the Freddie Mac Home Possible Mortgage as rental property loans. Another possibility is FHA loans. The FHA only requires 3.5 percent down.

With Fannie Mae, you can put as little as 3 percent down and they will allow you to either buy a building with an added separate dwelling unit or build one onto an existing building. Hence this is generally to just finance one rental property and not several investment properties.

If you are a veteran, then you won’t have to put any money down with a VA loan. USDA loans are another option if the rental property is in a covered area—and if you live there. 

Hard money lending can work if you get 90 percent to 100 percent financing.

You may also be able to cobble together this form of rental property financing with a home equity loan. Always check the loan term and mortgage rates closely.

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What Are the Most Common Investment Property Loans?

Note: the first five on our list are for if you plan to live on the premises.

Loan 1 – FHA Loan

The Federal Housing Administration insures these. The FHA is a part of HUD (Housing and Urban Development). With this form of house flipper financing, your down payment can be as low as 3.5 percent of the purchase price. The FHA loan is available on one to four-unit properties. 

Therefore, you can use one as a kind of house flip funding. And if you are adding energy-saving improvements, you can include the costs of energy improvements in an FHA Energy-Efficient Mortgage.

Loan 2 – Fannie Mae HomeReady Mortgage

The Fannie Mae HomeReady Mortgage is a government program for creditworthy low-income buyers. Put down as little as 3 percent and they will help you afford a down payment if that’s an issue. However, that can include the addition of a lien.

With their financing, this flip loan will allow you to add an ADU (accessory dwelling unit) or purchase a dwelling with one already built in. 

An ADU is what used to be called an ‘inlaw apartment’. That is, it is a second living space, often attached to the first. But it has its own kitchen, bathroom, and entrance.

Rental income can be used as a part of the qualifying income for the loan.

Loan 3 – a VA Loan

Are you a veteran? Then a VA loan might be a good choice for an investment property mortgage for you. Mortgage rates are low, thereby keeping your mortgage payment low. 

VA helps Servicemembers, Veterans, and eligible surviving spouses become homeowners. As part of their mission to serve, they provide a home loan guarantee benefit.

Plus there are other housing-related programs to help a veteran buy, build, repair, retain, or adapt a home for personal occupancy.

Loan 4 – Freddie Mac Home Possible Mortgage

The Freddie Mac Home Possible Mortgage is another government program, mainly to help people afford to buy homes.

They will allow a non-occupying person to borrow if the building is a one-unit property. Also, a renter with long-term roommates can become a homeowner and bring the roommates on as tenants.

You can cancel PMI when eligible, to reduce your monthly payment. The mortgage rate can be fixed or adjustable.

You can use rental income as a way to qualify for this type of real estate investing financing.

Loan 5 – a USDA Loan

USDA loans are only available for certain areas of the country, and you need an exact address. Eligible areas tend to be rural with very small populations, such as Saltsburg, Pennsylvania. 

You will also have to meet income eligibility requirements. In Pittsburgh (the closest major city to Saltsburg), the very low income limit for one person is currently $33,200. 

Your best bet is a loan for a multi-family unit. The USDA requires that the only tenants be 62 or older, have disabilities, or be considered very low-income or moderate-income individuals or families.

Loan 6 – a Loan from a Hard Money Lender

This is a fairly standard form of rental property financing. But it is also a form of investment property financing with a high interest rate.

Much like with a home equity loan or home equity line of credit, a hard money loan is secured by the property in question.

But unlike home equity lending, a hard money loan is specifically intended for a rental property. Terms tend to be short but you can get the money quickly. This can be a good option if you do not have good personal credit.

Loan 7 – a Construction Loan

Construction loans are a type of financing designed to fund the construction of new homes, whether it’s for personal or commercial use. It’s a type of short-term loan to cover the costs of building the house before the borrower gets a long-term loan, similar to a bridge loan.

The downside of this loan program is that the investment property down payment typically goes up to 20 to 25% or even higher due to its inherently risky nature. 

Alternative – Non-QM Loans

If you don’t meet the requirements of a traditional mortgage loan, consider applying for a non-QM loan (non-qualified mortgage). This type of loan is designed for individuals in unique situations, such as those with bad credit, have multiple income streams, and are foreign.

One type of non-QM loan is a portfolio loan, which offers non-traditional underwriting guidelines and customizations. Portfolio loans are more flexible and investor-friendly, making them easy alternatives for those looking to buy properties but don’t meet traditional requirements. 

Another type of non-QM loan is the stated income loan, where the lender doesn’t ask to verify your income through financial documents like pay stubs. This type of loan is designed to make the application process easier, especially for individuals with unique income set-ups, such as freelancers.

Are There SBA Loans for Investment Property?

You can use the SBA’s 504 programs to buy property or land. You can also use it to cover improvements and renovations for commercial real estate. You can get a 504 loan for up to $5 million.

According to the SBA, the 504 loan program is for long-term, fixed-rate financing for major fixed assets that promote business growth and job creation.

504 loans are available through Certified Development Companies (CDCs). These are the SBA’s community-based partners. They regulate nonprofits and promote economic development within their communities. All CDCs are certified and regulated by the SBA.

To be eligible, a business must meet the SBA’s requirements for size and revenue. You will have to have a feasible business plan and must be able to demonstrate that you can pay back the loan.

A business must have a tangible net worth of less than $15 million. It must have an average net income of less than $5 million after federal income taxes for the two years before the application.

They will not lend to businesses engaged in speculative activities. This means that they are not going to loan money to house-flipping businesses. And the money cannot be used for investing in rental real estate.

As a result, much like with many of the other government programs, you are far more likely to get money if you are planning to live on the premises.

Additional Ways to Buy an Investment Property with 10% Down

Way 1 – BRRRR Method

BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. It’s a strategy house flippers often use to grow their real estate investment portfolios.

Save up money to buy an affordable rental property—like a foreclosure or a fixer-upper. Rehabilitate the home strategically—focusing on repairs or upgrades adding the most value. When the house is ready, vet prospective tenants and rent it out. 

Once you’ve rented out the home for at least six to twelve months, you may qualify for a cash-out refinance on the property. Then you can take the equity you borrowed against for the new mortgage and do it all over again.

Way 2 – a Conventional Mortgage Loan

For a buyer with good personal credit, a conventional loan or commercial loan could be an attractive option. 

The down payment requirement can be lower than that for a loan for investment property. Also, if you plan to be an owner-occupant, there can be less stringent loan approval criteria. 

Down payments on owner-occupied homes can go as low as 5 percent to 10 percent with conventional mortgages. 

You may even save money on interest and fees if you plan to make your rental property your main residence. 

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Way 3 – Seller Financing

What if you made payments directly to the seller of the property, rather than a lender? That’s lender financing in a nutshell.

With no regulation, sellers don’t have minimum down payment requirements they must follow. Rather, sellers decide for themselves how much they’re comfortable accepting. 

Interest rates on seller financing agreements tend to be higher. But you may be able to negotiate a lower down payment in exchange. It depends on what that seller deems to be fair.

Way 4 – NACA Loans

NACA is the Neighborhood Assistance Corporation of America. They are an advocacy group dedicated to ending predatory lending. They have a mortgage program to make it easier for underserved communities to afford to buy their own homes.

There is no down payment or PMI. There are no closing fees. Their foreclosure rate is far less than one percent. Borrowers must attend a property workshop and a purchased workshop.

If you are considered low to moderate income, and your household income is equal to or less than the median for your Metropolitan Statistical Area, NACA considers you to be a high priority.

Way 5 – 401(k) or Self-Directed IRA

Often, you can’t invest in real estate directly from a 401(k) account. But you can roll it over—tax-free—into a self-directed IRA account. After the rollover, you can use the funds to invest in real estate, including commercial realty.  

But you could lose the money you invested if things go wrong. You may also be subject to taxes and an early withdrawal penalty if you can’t repay your 401(k) loan.

With a self-directed IRA, you can make investments beyond typical stocks, bonds, or mutual funds—like in real estate.

Open an IRA with a custodian that services self-directed accounts. Or open a checkbook IRA account and manage investment, record-keeping, and IRS reporting requirements yourself. Make sure you understand the risks inherent in this approach.

Way 6 – Private Money Lending

If you’re friends with a millionaire, why not try borrowing directly from them? 

The size of the down payment will vary, so it is not necessarily the best way to get a loan for only 10 percent down. Also, there is the very real personal risk of destroying your relationship—even if you always pay on time.

You may also be able to get short-term loans from a private individual for investment property purchases. But this is often hard money, with higher interest rates and fees.

Way 7 – “Subject to” Loans

A “subject to” loan is when you take over mortgage payments on a seller’s existing loan. The property you’re buying is subject to the loan that’s already in place. But you do not assume the loan itself.

There can be a difference between the total purchase price the seller is asking and the loan amount. If this is the case, you must pay the seller the difference in cash, get more financing, or negotiate a seller financing agreement.

Way 8 – Jumbo Loans

A jumbo loan is a type of mortgage financing that exceeds the limits of a typical housing loan. Usually, borrowers need to put 10% to 15% down. Plus, because the loan is so large, you must meet requirements that are higher than FHA, Freddie Mac, and other types of typical loans.

The limit for mortgage loans is currently at $726,200 for most states. With a jumbo loan, you can borrow more than that to buy a more valuable investment property. However, be wary that the investment property mortgage rate for this type of loan can be higher, especially if you choose a longer payment term like 30 years.

Check out our Credit Suite Credit Line Hybrid, where you can get up to $150,000 to help your business thrive.

What It Takes to Qualify for an Investment Property Loan

Naturally, lenders will have varying requirements. 

Most likely, a lender will check your business credit scores and your personal credit scores. They will want to know how long you have been in business, and what your debt-to-income ratio is.

Like with other forms of financing, you will need to take an honest look at your strengths and weaknesses. Poor personal credit? Then hard money could be your best bet. Low income? Then try NACA or the USDA.

If you are planning to live in the building, and it’s a small building of one to four units, then Freddie Mac and Fannie Mae could be on the table. FHA loans could be another viable option.

And if you are a veteran or a close relative of one (or a widow of one), consider a VA loan.

Depending on your relationship with the seller, you may be able to score a “subject to” loan or seller financing. If you are in the real estate investment game to continually flip houses, the BRRR method could work.

And if you’ve got a rich uncle, private money lending could be another way to go.

Play to your strengths; there is money out there.

Is It Harder to Get a Mortgage for an Investment Property Than a Home?

It can be harder to get an investment mortgage versus qualifying for a home mortgage. This is because the risk is higher for the lenders. 

Lenders need to make sure you have the financial stability to pay back the loan if your tenants stop paying, there’s a natural disaster, or anything else happens that would jeopardize your ability to pay them back. 

As a result, you would likely need to have higher credit scores and lower debt-to-income ratios to qualify for the best rates. But even if you don’t have great credit, there may be financing options out there, such as hard money financing.

If you are just starting with investment properties, be sure to consider what your monthly repayment cost will be. And always make sure you can afford it. 

If you are working to flip a house, there is no guarantee that you will be able to sell it before a loan payment comes due. Hence, if you can’t cover the loan payment, then you risk foreclosure on the property.

As with many forms of financing, better personal and business credit scores will always help you. Additional time in business and valuable property that can serve as collateral will also improve your chances.

How to Apply for an Investment Property Loan

Like with any type of business financing, always gather together the exhibits and paperwork before you fill out the application. Make sure you have a business bank account as well because there has to be a place where the lender can send the borrowed capital.

Required papers may include information about your business, tax returns (possibly both business and personal returns), and financial statements. 

The amount of time it will take to learn if your business is approved will vary depending on the lender and on the type of business financing you are seeking. A hard money lender will likely tell you quickly. But with a conventional loan, it may take a while to get a decision.

When you are putting 10 percent down (or even less), you will most likely be required to purchase private mortgage insurance (PMI). Plus, you will have to pay the premiums on your mortgage insurance until you have 20 percent equity or more.

After approval, you will get a loan agreement. It will list the loan terms, including your mortgage rate. If you are willing to accept the terms, sign the documents, and the funds will be deposited into your bank account.

What to Consider Before Buying an Investment Property

One thing you will need to consider goes beyond the actual price of the real estate. It’s the property tax you will have to pay. Even if you can get a great loan with a good interest rate, it may not matter much if the taxes are astronomically high.

While every lender is going to be different, some of the more typical requirements to expect when applying for a residential rental property loan include:

  • A FICO credit score of at least 620
  • No more than a 36 percent debt-to-income (DTI) ratio
  • A down payment, with the percentage based on the property type and your credit

In general, you will also need to have a good six months’ worth of cash reserves to qualify. So, if you do not have that kind of cash on tap, you may do better with a lower-income option.

And think long and hard about whether you want to become a landlord or landlady in the first place. If all you are going to do is flip houses, then this is not truly a consideration. 

But in particular, if you are going to live in the investment property, you may want to keep in mind just what being a lessor involves.


Many forms of investment property lending have restrictions, and you are often a better candidate if you are going to live on the premises. But you can’t live everywhere. So, how do you find other options for financing?

This is where Credit Suite comes in. Contact us today to discuss the best choices for your business, your odds of approval, and what you can do to improve those odds.

About the author 

Janet Gershen-Siegel

Janet Gershen-Siegel is the seasoned Finance Writer and a former content manager at Credit Suite. She has been admitted to practice law for over 30 years, with a focus on litigation and product liability, and is a published author, with writing credits at Entrepreneur, FedSmith.com and BusinessingMag.com.

She has a BA in Philosophy from Boston University, a JD from the Delaware Law School of Widener University, and a MS in Interactive Media (Social Media) from Quinnipiac University.

She regularly writes for Credit Suite, which helps businesses improve Fundability™, build credit, and get approved for loans and credit lines.

Her specialties: business credit, business credit cards, business funding, crowdfunding, and law

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