Best Investment Property Loans

Investment properties can have many upfront expensive barriers, but financing options such as investment property loans can open a world of possibilities. Investment property loans offer interested lenders an opportunity to maximize returns. Investment properties can be rented or flipped to help generate additional income.

Real estate is viewed as a strong investment choice because it can grow over an extended period. Before applying for a property investment loan, research available loans and review important components such as your credit score, expected term length and required financial amount. Factors such as the intended location of your investment property can also play a role in the amount of potential income available to you. Consult with financial professionals and real estate experts before applying for a loan.

Investment property loans can help you to obtain an investment property and open the door to more income. 

Best Personal Loans for Investment Properties

• Best for Bank Statement Loans: Angel Oak Mortgage Solutions
• Best for Online Loans: Rocket Mortgage
• Best for Excellent Credit: PennyMac Financial Services
• Best for Fair Credit: Citibank
• Best for Bad credit: New American Funding
• Best for Comparing Lenders: Lendio
• Best for Rehab Loans: Lending One

7 Best Personal Loans for Investment Properties

Investment property loans offer a wide range of options that can accommodate different needs and timelines. Before looking at investment property loans, think about your current credit score and decide if it would be beneficial to work on increasing your score before applying for a loan. Research options and compare how key factors such as term rates, interest rates and expected property down payments play into your financial budget. 

Before buying an investment property, try to calculate the expected ROI on the specific property. An ROI is the return on investment that is used to calculate how an investment performs. This ratio can help you to better anticipate how successful certain properties might be, but do understand that investment performance is not guaranteed.

1. Best for Bank Statement Loans: Angel Oak Mortgage Solutions

Angel Oak Mortgage Solutions is a full-service mortgage lender offering traditional and portfolio Non-QM mortgage loans. Their Investor Cash Flow loan specifically for real estate investors is one of their most utilized loan products. This investor cash flow product does not require income, tax returns or employment information. It qualifies on the expected rent or cash flow of the property. 

• Loans from $75,000 to $1.5 million
• No income or employment information required
• Short-term rentals allowed (Airbnb, VRBO)
• Properties can be in LLC's name
• No limit on number of properties
• Non-warrantable condos allowed
• Purchase, cash-out or rate-term refinance
• Borrower must own primary residence
• 40 year fixed interest-only available*

2. Best for Online Loans: Rocket Mortgage

Rocket Mortgage was previously known as Quicken Loans until 2021. The Detroit-centered company recently changed its name to more accurately represent the speed of its offered loans. The company was created in the 1980s and quickly grew into a national powerhouse lender. In 2017, the company became a top residential mortgage lender. 

What makes Rocket Mortgage unique is that it offers a wide range of loans and mortgages. The company offers you the possibility to refinance investment property loans. Refinancing a loan changes the terms of a loan and potentially leads to lowered monthly payments. The website offers helpful calculation tools to better address your financial situation. The company makes it possible for interested lenders to apply online.

Loan terms go to 30 years. Credit scores over 620 are recommended. Mortgages such as a 30-year fixed loan offer interest rates of around 5.39% at time of writing. Rocket Mortgage allows down payments of% for certain loans; however, down payments tend to range around 20%.

One reason that down payments less than 20% have more strict regulations and terms come from the understanding that lenders take on an increased level of risk when the borrower covers less of the down payment. Another reason for higher down payments on investment properties comes from data showing that borrowers are more likely to default on an investment property than a primary residence. 

However, Rocket Mortgage provides stipulations regarding a person’s debt-to-income ratio that should be examined when deciding on a loan. 

3. Best for Excellent Credit: PennyMac Financial Services

PennyMac Financial Services was founded in 2008 and has since helped over 4 million homeowners. The company is located in Westlake Village, California, and has 16 locations nationwide.

What makes the company unique is its specialization in financing real estate. Its loans are recommended for potential borrowers who have good-to-excellent credit scores above 620, with terms from 10 to 30 years. PennyMac Financial Services provides helpful educational tools to better inform borrowers about investment properties such as second homes and multi-family units. For example, multi-unit investment properties usually require a minimum 25% down payment. Exact rates and loan amounts vary depending on information such as property type as well as your credit score and financial situation. 

Before applying for an investment property loan, calculate your debt-to-income ratio and credit. A debt-to-income ratio examines the amount of income that a person owes versus earns. Lower debt-to-income ratios are recommended when trying to qualify for specific investment property loans. One potential drawback is that exact funding times aren’t disclosed. 

4. Best for Fair Credit: Citibank

Citibank first began in 1812 in New York and maintains a rich financial history of over 200 years. The company offers a range of financial services such as banking, wealth management and loans. 

Citibank’s strong history as a financial institution within the U.S. makes it a unique and knowledgeable lender. The website does not provide an exact minimum credit score for investment property loans but recommends that interested borrowers maintain scores above 620. To create a more personalized loan offer, Citibank analyzes factors like your credit score and financial history. Luckily, it is still possible to gain a rough understanding of the loan market. For example, for a 30-year fixed mortgage within Los Angeles, California, rates range around 5.25% while the APRs are closer to 5.461%. Loan rates vary between 5 and 30 years depending on factors such as the type of property, location, loan type and your credit score.

Overall, Citibank offers a wide variety of financial options but does not specialize in real estate like other lending competitors. 

5. Best for Bad Credit: New American Funding

New American Funding is a privately held mortgage lender that was founded in California. 

The direct mortgage lender is unique because it offers a wide selection of loans from reverse mortgages to ARM loans. An ARM loan stands for an adjustable-rate mortgage, and it offers a mortgage with a variable rate. 

New American Funding focuses on making homeownership attainable by offering a wide range of loan options. The company offers loan terms that go to 30 years depending on the selected loan type. Investment property loans can potentially be provided to lower credit scores, but New American Funding recommends having investment and personal expense information available if your score is below 740. Putting a down payment of around 25% instead of the minimum 15% helps you to obtain lower interest rates. Another point to make note of is that the more money that you put down for a downpayment, the more likely you are to pay lower rates. Loan terms and rates vary depending on your credit score and financial information.

Alternatively, if you are looking for a primary residence and have bad credit, then a United States Department of Agriculture Loan (USDA) or a Federal Housing Administration Loan (FHA) might be right for you. However, both loans are government-backed programs intended to help people own a primary residence, so both loans cannot apply to investment properties. 

The company specializes in California homes, so it might not work for all interested borrowers. 

6. Best for Comparing Lenders: Lendio

Lendio helps small businesses obtain funding through an online loan marketplace. The company has helped to fund over 300,000 loans by working with partners such as Bank of America and Chase.

One thing that makes Lendio unique is that the company offers information on a wide range of commercial mortgages, which are also known as business mortgages or loans. The company offers loans specifically designed to help purchase or refinance a commercial property. Lendio potentially helps provide funds in less than 45 days, which can prove beneficial if you are constrained to a tight timeline. 

The loans range between 20 and 25 years. Lendio offers lower interest rates between 4.25% to 6% under the proper conditions. Loan amounts are between $250,000 and $5 million. Loan terms and loan amounts are closely tied to the strength of your credit score, so it’s advised to enter into a commercial property loan with a strong to excellent credit score. 

7. Best for Rehab Loans: Lending One

Lending One focuses on serving real estate investors by combining technological advances with real estate financing. The company was founded in 2014 and offers a wide range of funding solutions for interested investors. 

The company is unique because it offers all kinds of real estate loans from fix-and-flips to rentals. Fix-and-flips are properties that are purchased, renovated and then sold for a profit. Lending One understands the business activities executed within the real estate market and effectively diversifies its loan offerings to better fit funding needs. For example, Lending One offers different loan amounts depending on the type of property and potential renovations. 

Lending One terms range around 30 years for investment property financing. The company offers a wide range of loans with different terms and rates. For example, Lending One provides a minimum loan amount of $75,000 and a maximum amount of around $10 million for fix-and-flip loans. It’s recommended to have a minimum credit score of at least 680. No specific rates were provided. 

Overall, the company is relatively new to the competition but offers extensive real estate expertise.

Things to Consider Before Getting an Investment Property Loan

Investment property loans help you achieve your goal of obtaining passive income. Passive income is a type of income that’s earned automatically with a minimal amount of ongoing work. Investment properties help you achieve passive income and boost the number of funds that are available to you at a monthly or annual rate.

Examine Your Options

Before getting an investment property loan, examine your options and think about what makes the best sense for your finances. For example, it’s recommended not to stretch your finances too thin with a loan to better guard against unforeseen expenses. 

Investment property loans can help you in your goal to obtain an additional income stream through renting, flipping or selling the properties. Investment properties are different from your primary residence, so there are specific loans available for them.

Request Loan Estimates

Examine the potential investment property and receive several estimates if possible. These estimates create a better picture of the amount of time and tools needed for renovations or the initial purchase of the property. A loan helps you obtain and rework an investment property into the income stream of your choosing. Have an idea about if it would be better to lease or sell the property before entering into a loan.

Understand Loan Terms and Fees

Research the terms of each loan and examine if there are any hidden charges such as penalty fees. Review potential fees such as origination fees and ask if they are built into the loans. These added fees might require you to increase the total amount of funds needed for a loan. Unforeseen fees can make it difficult to repay the loan, so calculate and locate expenses before making a decision.

Look Into Customer Reviews

When reviewing investment property loans, it’s a good idea to read the customer reviews. Customer reviews show how a lender treats and handles current customers, indicating how you will potentially be treated 

When researching a loan, take your time and examine the details because loans that look appealing at first glance might look different after a more thorough investigation. 

Secure Your Financial Future with the Best Investment Property Loans Available

Although investment properties offer many positives such as tax benefits and consistent alternative income, they also come with potential drawbacks. For example, investment properties often require extensive work and expose you to financial risk. Like many investments, bigger risks tend to offer higher potential for growth. Know your level of risk tolerance before buying an investment property. 

Frequently Asked Questions