An investment property loan is a form of real estate financing designed to help investors purchase, renovate, build, or refinance properties for investment purposes. Common investment purposes include fix and flip projects and long-term rental holds.
However, when addressing which is the best loan for an investment property, it’s important to consider the asset, investment strategy, risk tolerance, and timeline. But with so many options, what type of loan is best for an investment property?
It depends. The right investment property loan type should match the deal, how quickly you need to close, and how you plan to scale.
This article will explain the differences among loan types, including fix and flip, debt service coverage ratio (DSCR) rental, new construction, and conventional mortgages.
Key Takeaways
- There is no single “best” loan among investment property loans. The right financing will always depend on the specific property type, investment strategy, timeline, and exit plan.
- Short-term loans, such as fix and flip and fix to rent, prioritize speed and leverage, while long-term options, like DSCR rental loans, support cash flow and portfolio growth.
- Compared to conventional, FHA/VA, HELOC, or hard money options, LendingOne’s business-purpose loans offer higher leverage, faster closings, and underwriting based on the deal rather than personal income.
H2: What Are Investment Property Loans?
Investment property loans allow real estate investors to finance the purchase, construction, renovation, or repair of an investment property. Investment loans are designed for homes intended for investment purposes, such as fix and flip or long-term holds for rental income.
H3: How Investment Property Loans Work
Investment property loans and primary residence loans have a few key differences. First, investment property loans often carry higher interest rates to reflect the greater risk of default. They also tend to have stricter qualification requirements for credit scores and down payment amounts.
Finally, depending on the loan program, lenders may place greater emphasis on the property’s financial potential rather than the investor’s personal income.
Types of Properties That Qualify
Many different types of properties qualify for an investment property loan. This includes single-family rentals, multifamily properties, fix and flip projects, and new construction investments.
Depending on an investor’s track record and qualifications, some lenders may also offer portfolio loans for multiple properties.
Why Investors Use Specialized Financing
Real estate investors often have specialized needs that conventional loans often cannot meet. Depending on the loan program and lender, investment loans can offer faster approvals as well as more flexible qualification criteria and repayment terms.
These features can allow investors to acquire deals in a competitive market and finance properties at a faster rate than conventional financing might otherwise allow.
Comparing the Best Loans for Real Estate Investors
The “best” loan will differ depending on your needs and investment strategy, making it important to compare the details of each financing structure.
| Loan Type | Best For | Leverage (LTC/LTV) | What It Finances | Key Benefits |
| Fix and Flip | Short-term rehab projects | Up to ~90% LTC | Purchase, renovation | Fast closings, rehab funding included |
| Fix to Rent | Rehabs converting to rentals | Up to ~85-90% LTC | Purchase, rehab, refinancing | Single loan from rehab to rental |
| DSCR Rental | Income-producing rentals | Up to ~75-80% LTV | Stabilized rental properties | No personal income verification |
| New Construction | Ground-up builds | Up to ~85-90% LTC | Land costs, construction costs | Draw-based funding, flexible terms |
| Conventional Mortgage | Primary or secondary homes | Up to ~80% LTV | Purchase, refinancing | Low rates, long amortization |
| FHA or VA (Owner Occupied) | Owner-occupied buyers | Up to ~96.5% (FHA), 100% (VA) | Primary residence | Low down payment options |
| HELOC | Equity access on owned property | Based on equity | Revolving line of credit | Flexible capital access |
| Commercial Multifamily | 5+ unit properties | ~65-75% LTV | Multifamily acquisitions | Scale assets |
| Hard Money | Time-sensitive deals | Up to ~70% ARV | Purchase, rehab | Speed, minimal documentation |
Fix and Flip Loan
A fix and flip loan is designed for investors acquiring properties to renovate and resell. These loans typically cover both purchase and renovation costs and are usually underwritten based on the deal, rather than personal income verification.
Because fix and flip strategies depend on speed, these loans are structured to support faster closings than traditional bank financing. They allow investors to turn capital efficiently and are best suited for experienced operators managing tight renovation timelines and budgets. Investors should, however, note that these loans are meant to be a form of short-term financing typically repaid within one to two years.
If you’re considering lending options, see our guide to the best fix and flip lenders.
Fix to Rent Loan
The fix to rent loan is a good fit for investors using the BRRRR method (buy, rehab, rent, refinance, and repeat).
BRRRR is used by investors building rental portfolios by purchasing undervalued properties, renovating them, and refinancing them into long-term rental financing. Fix to rent loans are structured to support this full transition from acquisition and rehab to stabilized rental.
At LendingOne, fix to rent loans can cover up to 95% of financing costs, with discounted refinance fees and a streamlined path into a DSCR rental loan.
DSCR Rental Loan
DSCR loans are well suited for investors pursuing long-term rental strategies. Instead of relying on personal income verification, qualification for DSCR loans is based on a property’s projected rental income.
In addition to flexible underwriting, DSCR loans typically offer 30-year terms. This allows investors to stabilize cash flow and execute long-term hold strategies.
New Construction Loan
New construction loans support investors developing build-to-rent homes or multifamily properties from the ground up. These loans provide capital for construction on vacant land and are often underwritten using projected rental income rather than personal income.
LendingOne new construction loans can offer up to 90% LTC and typically charge interest only on drawn funds. Flexible construction terms help accommodate longer build timelines and potential delays.
Conventional Investment Property Mortgage
Some multiproperty investors may qualify for traditional agency-backed investment loans, but the process is typically lengthy and documentation-heavy. Given the alternatives, these conventional loans are typically best for borrowers with high personal income and longer closing timelines.
Conventional loans typically carry long repayment terms of up to 30 years. However, approval often requires tax returns, personal income verification, and strict debt-to-income limits. These limits commonly follow the 28/36 rule, which limits housing expenses to 28% of gross income and total monthly debt to 36% of gross income.
For investors seeking more flexibility, LendingOne offers business-purpose loans under an LLC that eliminate personal income verification and better align with active investment strategies.
LendingOne presents an alternative to conventional property loans and does not offer this traditional loan type.
See our guide to DSCR loans vs conventional loans to see how these financing options compare.
FHA and VA Loans
Certain investors may qualify for Federal Housing Administration (FHA) or Veterans Affairs (VA) loans. These are government-backed programs for owner-occupied properties. FHA loans allow lower down payments and more flexible credit requirements than conventional mortgages.
VA loans are available to eligible veterans and active-duty service members and offer 100% financing with no private mortgage insurance. Both loan types can be used to live in one unit while renting out additional units.
HELOC on Primary Residences
A home equity line of credit (HELOC) is a revolving line of credit that uses a home’s equity as collateral. This means investors can use the value of their home as a way to access capital to invest in another property type.
Commercial Multifamily Loan (5+ Units)
Commercial multifamily loans are used to finance apartment buildings with five or more units. These are typically underwritten using commercial lending standards, including factors like property performance, sponsor experience, and market fundamentals.
Hard Money Loan
A hard money loan is a short-term financing option often used for time-sensitive real estate transactions. While these loans can provide fast access to capital along with flexible underwriting criteria, they typically come with higher interest rates and more restrictive terms. Hard money loans also tend to be less ideal for long-term holds due to the short repayment terms.
LendingOne offers an alternative to hard money through structured private lending with consistent underwriting, transparent terms, and financing designed to support repeatable investment strategies.
Investors considering this option can review our guide to the best hard money lenders.
How to Choose the Best Loan for Your Investment Property
If you’re not sure which of the above best serves your investment goals, ask yourself the following questions:
- Timeline: When do you plan to invest? Are you targeting a near-term acquisition or a longer-term opportunity?
- Property Condition: Is the property move-in ready, or does it require renovations? If so, how extensive is the scope of work?
- Investment Horizon: Do you plan to hold the property long term, or exit after a shorter stabilization period?
- Financing Preference: Do you prefer financing based on property cash flow or total project cost?
- Purchase Type: Are you acquiring vacant land for new construction, or an existing structure?
The answers to these questions will help you determine which is the best loan for your investment property goals.
Investment Property Loan Requirements
Investment property loan requirements vary by lender and loan program, but the following are among the most common factors considered:
- Credit Score: Higher scores represent a lower likelihood of becoming delinquent on a loan. Higher credit scores can also help borrowers qualify for more favorable terms.
- Down Payment: A large down payment of 25% or more reduces the lender’s risk in the event of a default, as it increases their likelihood of recouping losses during the foreclosure process.
- Cash Reserves: Cash reserves of six or more months of mortgage payments can signal lower risk of defaulting in the event of a temporary disruption to a borrower’s income.
- Property Cash Flow: Some programs, like DSCR loans, evaluate whether the property’s rental income can cover the corresponding mortgage payments.
- Investor Experience: Investors with a track record of successful investments are more likely to get approved and may qualify for more favorable loan terms.
Why Investors Choose LendingOne
LendingOne’s financing programs are built for real estate investors. Its programs are tailored for a variety of investment strategies, including BRRRR projects, fix and flip investments, new construction, and long-term rental investments. Eligible programs have flexible underwriting criteria to simplify the approval process. With a nationwide lending footprint and fast closings, LendingOne can support financing for long-term portfolio growth.
See your rate today or connect with a LendingOne advisor to find financing solutions tailored to your next property.
FAQs About the Different Types of Loans for Investment Property
Which Loan Offers the Highest Leverage?
LendingOne offers competitive leverage across its loan programs:
- Fix to rent loan offers up to 95% of the cost of a purchase plus rehab.
- Fix and flip offers up to 92.5% loan to cost (LTC) and covers up to 100% of rehab.
- New construction loans can cover up to 90% of LTC.
- DSCR rental loans offer up to 80% loan to value (LTV) for purchases.
These higher leverage rates can help investors reduce their upfront capital requirements and scale portfolios more quickly by preserving cash for additional projects. Leverage approval will always depend on project details and underwriting.
What If I Plan to Keep Some Properties and Flip Others?
Many investors use fix and flip for sale projects and fix to rent (or DSCR loans) for hold projects. This is straightforward, as LendingOne’s process stays consistent across both paths, reducing friction and speeding up execution.
For example, if an investor chooses fix to rent, they will already have documents on file to help them streamline their DSCR refinancing. It is not uncommon for investors to shift exit plans mid-project. LendingOne’s flexibility supports this.
How Quickly Can I Close?
Fix and flip and fix to rent loans from LendingOne can close in as little as 10 to 14 business days, depending on appraisal and underwriting readiness.
DSCR and portfolio loans can take longer, generally closing in around 21 business days. The timing of new construction loans depends on overall complexity, but tends to be streamlined once plans and budgets are provided.
In all cases, quick closings start with complete documentation, fast appraisal access, and upfront project clarity.
What Documents Do I Need?
To apply and qualify for a LendingOne loan, applicants need to show a current schedule of all investment properties. They will also be required to show personal identification such as a driver’s license.
For acquisitions, LendingOne will ask for proof of a purchase agreement. Construction or rehab projects may need to show their budget.
In all cases, borrowers should be prepared to provide title agent contact information and submit appraisal payment as part of the underwriting process.
