Is it hard to get a loan for a rental property?

Investing in rental properties can be an excellent way to build wealth and generate passive income.

However, one of the challenges that many investors face is obtaining financing to purchase rental properties.

So, is it hard to get a loan for a rental property? 

The answer to that question is not straightforward, and it depends on several factors.

First and foremost, lenders typically view rental properties as riskier investments than primary residences. Rental properties can be subject to more wear and tear, and the income generated from them may be less stable than income from a primary residence. As a result, lenders typically require higher down payments, have stricter credit score requirements, and charge higher interest rates for rental property loans.

Another factor that can make it harder to get a loan for a rental property is the number of properties an investor already owns.

Many lenders limit the number of rental properties an investor can own, and some may not lend to investors who already have multiple properties. Lenders may view investors with multiple properties as higher risk because they may struggle to manage their properties effectively or may be more vulnerable to changes in the real estate market which in turn may make it seem harder to get a rental loan.

Finally, lenders may also consider the location of the rental property when evaluating loan applications.

Some areas may be deemed riskier than others, and lenders may be hesitant to lend in those areas. For example, lenders may be more cautious about lending for rental properties in areas that are prone to natural disasters, have a high crime rate, or have a high vacancy rate.

Despite these challenges and as hard as it can seem, it is still possible to obtain a loan for a rental property.

Here are some tips to increase your chances of getting approved for a rental property loan:

1. Build up your credit score:

A high credit score can help you qualify for better loan terms and lower interest rates.

2. Save up for a larger down payment:

A larger down payment can demonstrate to lenders that you are financially stable and can help lower your interest rates.

3. Be prepared to provide detailed financial information:

Lenders may require more documentation for rental property loans, including income and expense statements, tax returns, and rental income history.

4. Consider working with a specialized lender:

At LendingOne we are focused on providing excellent client service, a professional approach, and true reliability. Our industry experts provide a tailored strategy and one-on-one transaction support to help you grow your portfolio. We help part-time investors, large landlords, developers, and real estate funds; all with the same passion for success.

If you find it hard to get a loan on a rental property, we are fortunate to have over 1,000 existing clients come back to us each year. Would you like to speak with a Real Estate Advisor, who helps investors in your state?

Click Here to learn more >

Most people also viewed

Speak with a Rental Loan Advisor Today!

Related Rental Loan FAQs


How to get a loan for a rental property?

How to get a loan for a rental property? Securing a loan for a rental property is a fundamental step in becoming a real estate investor. Here's a straightforward guide on how to obtain the necessary financing for your rental property: Check and Improve Your Credit...


How to get a commercial loan for rental property?

How to get a commercial loan for rental property? Acquiring a commercial loan for a rental property, whether it's a multifamily apartment complex, a retail space, or an office building, requires a strategic approach. Here's a step-by-step guide to help you navigate...


Can you use a VA loan for a rental property?

Can you use a VA loan for a rental property? VA loans, backed by the U.S. Department of Veterans Affairs, offer eligible veterans, active-duty service members, and certain members of the National Guard and Reserves the opportunity to achieve their dream of...


Can you get an FHA loan for a rental property?

Can you get an FHA loan for a rental property? FHA loans, backed by the Federal Housing Administration, are a popular mortgage option for homebuyers, especially first-time buyers, due to their low down payment requirements and more lenient credit criteria. However,...

Call Now Button