Loan Products · February 9, 2025
Investment Property Loans: DSCR, Conventional, and Portfolio Options
Financing investment properties requires a different approach. Here is the complete breakdown of DSCR loans, conventional investment financing, and portfolio options.
Real estate investors have more financing options than ever. Here is the clear breakdown.
Conventional Investment Property Loans
For investors buying 1-4 unit residential properties qualifying on personal income.
Requirements: minimum 15% down (single-family), 25% down (2-4 units), credit score 680+ preferred, DTI qualification using personal income, maximum 10 properties financed with Fannie/Freddie.
Rate premium: expect 0.5-0.875% above owner-occupied rates.
Rental income: 75% of market rent may be added to qualifying income with documentation.
DSCR Loans: Income-Based Qualification
DSCR = Monthly Gross Rental Income divided by Monthly PITI.
No personal income documentation. No tax returns. No employment verification. Qualification based solely on the property's cash flow.
Requirements: credit score 680+ typically (700+ for best rates), down payment 20-25%, no limit on number of properties, can close in LLC.
Portfolio Loans
Held by the lender rather than sold to Fannie/Freddie. More flexibility on property types, higher DTI allowances, alternative income documentation, LLC ownership, multiple properties with same lender.
Trade-off: higher rates (0.5-1.5% above conventional).
HMS connects investors with the right product for their strategy. Call 309-222-8286.