Today’s Investment Property Mortgage Rates

By: Gina Freeman Updated By: Ryan Tronier Reviewed By: Paul Centopani
January 4, 2024 - 22 min read

How much higher are current investment property interest rates?

As a general rule, investment property mortgage rates will typically be at least 0.50% to 0.75% higher than primary mortgage rates.

Lenders consider investment properties to be riskier than owner-occupied homes, given that borrowers are more likely to default on investment property loans. Keep in mind that these are general guidelines, and rates can vary significantly from lender to lender and from borrower to borrower.

Still, despite higher rates, investing in real estate is often a good long-term idea. Here’s how much you can expect to pay now to finance that future cash flow.

Check today's investment property mortgage rates. Start here


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Current investment property mortgage rates for February 29, 2024

Investment property rates are usually at least 0.5% to 0.75% higher than standard rates.

Compare rates for your new home loan. Start here

At today’s average rate of % (% APR) for a primary residence, buyers can expect interest rates to start around % to % ( - % APR) for a single-unit investment property.

Loan TypePrimary Residence RateInvestment Property Rate
Conventional 30-year fixed rate % (% APR) % to % (% -  % APR)
Conventional 15-year fixed rate % (% APR) % to %  (% -  % APR)


Rates are provided by our partner network and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.

Note that today’s average interest rates for investment properties are based on a prime borrower profile with a credit score of 740 and a 40% down payment. If you have lower credit or a smaller down payment, your interest rate will likely be higher than what you see advertised.

That’s why average rates should only be used as a benchmark. Your investment property rate will differ, so be sure to compare quotes from a few lenders and find the best deal for you.

What are investment property mortgage rates?

An investment property mortgage rate is the interest rate on a loan intended to buy or refinance an investment property, which is one that the borrower does not intend to use as their primary residence.

Check today's investment property mortgage rates. Start here

Most of the time, these properties are bought to generate rental income or to increase in value over time. Single-family homes, duplexes, triplexes, and apartment buildings rented out to tenants are examples of investment properties.

Investment property mortgage rates are usually higher than mortgage rates for primary residences because lenders consider them riskier loans.

How much higher are investment property mortgage rates?

Investment property mortgage rates will always be higher than those for primary residences. But how much higher?

The exact answer to that question depends on the type of investment property, your creditworthiness, and your down payment. But as a rule of thumb, you can expect the interest rate on your investment property to be at least 0.50% to 0.75% higher than the rate on your primary mortgage.

Compare rates for your new home loan. Start here

As a rule of thumb, you can expect investment loan rates to be at least 0.50% to 0.75% higher than the rate on your primary mortgage.

For example, today’s live 30-year fixed rate as of February 29, 2024 is % (% APR), so the investment property mortgage rate would be around % to % (% - % APR).

Lenders add this surcharge because they consider rental and investment property mortgages to be higher-risk. If times are tight, mortgage borrowers are more likely to default on rental properties than on their primary property.

Furthermore, economic hardships also affect a renter’s ability to make monthly payments. So these types of home loans are more likely to default during hard economic times.

To compensate for the additional risk, lenders charge higher investment property mortgage rates and impose stricter borrower qualification requirements. That makes it extra important to shop around to ensure you get a fair mortgage rate on your investment property before buying.

How are interest rates set for investment properties?

Behind the scenes, the rate you pay isn’t totally up to your mortgage lender. Banks frequently adjust their investment property mortgage rates in accordance with Fannie Mae and Freddie Mac guidelines.

Fannie and Freddie set the guidelines for most mortgages today, and the fees they charge directly affect the final interest rate you pay. Because of the increased risk of purchasing or refinancing investment properties, Fannie and Freddie charge higher fees on those transactions. Their fees trickle down to you as a higher interest rate.

Type of investment propertyTypical rate increaseMarket interest rates (example)Interest rate for investment property (example)*
1 unit0.5 - 0.75%5.5%6.0%-6.25%
2-4 units0.625 - 1%5.75%6.375%-6.75%

*Rates shown here are an example set meant for comparison only. Your own rates will vary. 

For instance, an investment property loan with a 25% down payment would require a fee equal to 6.375% of the loan amount. This is the same as $6,375 for each $100,000 borrowed. In most cases, the borrower will pay a higher interest rate instead of paying extra dollars in closing costs. So, how do these fees translate to your final rate?

In this case, 6.375% of investment property loan fees can be covered by an extra 0.5% to 0.75% added to the rate.

Keep in mind that this is for a single-family home. Buy a duplex, and you might pay another 1.0% in fees, or 0.125% to 0.250% added to your rate.

“To get the best rates, you will want to put at least 25% down. The ideal loan-to-value ratio for investment purchases is 75% or less,” advises Jon Meyer, loan expert and licensed MLO.

What affects investment property interest rates?

Fannie Mae and Freddie Mac guidelines aren’t the only factors influencing investment property mortgage rates. Your personal finances and the current market rate play a significant role too.

Check your investment property rates. Start here

The following factors play a major role in determining investment property rates:

In fact, when you buy an investment or rental property, your personal finances (including your credit record and even your tax returns) will be scrutinized much more closely than when you buy a primary residence. To qualify for your investment mortgage and get a reasonable rate, you’ll need an exceptional financial background.

Investment property down payments

Most rental property buyers will finance their homes via conventional loans. Following are the down payment requirements to buy a rental property.

Loan Type1 unit2-4 unit
Fixed-rate mortgage15% down25% down
Adjustable-rate mortgage15% down25% down

A down payment of 15% to 25% is significant, especially when compared to the 3% you could put down on a conventional mortgage for a principal residence or the 0% down payment available to homebuyers who qualify for USDA or VA mortgage loans.

“Most investment lenders prefer buyers to have 25% down. You can go lower, but the rate may be significantly higher,” says Meyer.

Bigger down payment requirements are just another way lenders protect themselves against risk when underwriting loans for real estate investing.

Investment property credit score requirements

When you finance an investment property, lenders generally want to see a better credit score than they do for a primary residence. For instance, Fannie Mae borrowers putting at least 25% down could get approved with a 620 FICO score for a primary home. That minimum credit score increases to 640 for a rental.

If you don’t have great credit, you can try an FHA loan; the underwriting is much more lenient. FHA loans are available for homes with up to four units, and credit score requirements start at 580. The catch? You must live in one of the units, so the building is still technically your primary residence.

Other guidelines for rental and investment property loans

When you apply to buy a rental property, underwriters will verify your abilities as a potential landlord. If you’ve never owned a home or managed any property, you’ll have a tougher time. However, some lenders allow first-time real estate investors to get around this by hiring a property manager. There is nothing definitive about this in the official guidelines, so check with your loan officer.

There’s also a limit to the number of mortgaged properties you can own if you go with conforming loans (Fannie Mae or Freddie Mac). And you’ll be required to have cash reserves (several months’ worth of mortgage payments) in the bank to cover those months when your property is unoccupied.

How to get the lowest investment property mortgage rates

It’s hard to escape high interest rates for investment properties. But there are ways to make sure you get the best deal possible.

Check your investment property loan options. Start here

1. Make a bigger down payment

The surest way to get investment property mortgage rates is to make a larger down payment. Much of the added cost goes away if you can put at least 20% down.

It might be worth borrowing against the equity in your current home to increase your down payment. You can also buy a cheaper house or find a foreclosure you can buy at below-market value. You could even consider, if this is an exceptional investment, borrowing against your 401(k).

2. Improve your credit score

Most rental property buyers will finance their purchase with a conventional loan (more on investment property loan types below). Mortgage rates for investment property are extremely sensitive to credit scores. Following is an example of a buyer with a 650 score compared to a 720-score buyer.

Credit scoreHome priceDown paymentRateP&I paymentSavings
650$250,00025%5.75%$1,095
720$250,00025%5.125%$1,020$75/mo

Because of the reduced monthly payments, a property buyer with a higher credit score may be able to offer tenants a lower rental rate. This real estate investor might also leverage the lower monthly payment to generate additional cash flow.

3. Reduce your existing debt

Your debt-to-income ratio compares your monthly debt repayments to your monthly gross income. Lenders use your DTI to determine the loan amounts you’ll have access to, and it shouldn’t exceed 43% for most types of loans.

Lowering your DTI shows lenders that you have plenty of room in your budget for monthly mortgage payments and other property management costs. These include homeowners insurance, property taxes, and ongoing maintenance and repairs.

4. Shop around

Home buyers often save hundreds of dollars per year—and thousands over the life of the loan—by shopping around for their mortgages.

This is a relatively easy step that many home buyers skip because it feels inconvenient. But as a real estate investor, you should aim to get the most bang for your buck. Lower investment property mortgage rates can boost your rental property revenue, so take the time to obtain at least three to five rate quotes and choose the best financing option.

Tips to shop for the best investment property mortgage rates

Finding the right mortgage interest rate for an investment property can make all the difference between a profitable venture and one that drains your wallet.

Unfortunately, investment property rates tend to be higher than those for primary residences and even second home mortgage loans. This can add an extra layer of complexity to your hunt for a better rate. However, if you follow these key steps, you can effectively shop for the best mortgage rates for your investment property.

Get your finances in order

How solid is your financial foundation? Your personal finances are crucial when shopping for a competitive mortgage rate on an investment property. Lenders are particularly cautious with investment properties, so they’re looking for borrowers who are financially stable.

Aiming for a credit score above 720 can open doors to the best investment mortgage rates possible. Improve your credit by paying down high-interest credit card debts, keeping your credit utilization low, and ensuring timely payments. Have you ever checked your credit report for mistakes? It’s worth a look, as errors can drag down your score.

Research lenders

Ever thought about shopping around for lenders like you do for a new car? Don’t just stick to your current bank. While it may offer convenience, there could be better investment property rates out there.

Explore a mix of private lenders, national banks, local community banks, credit unions, and online lenders. Each offers different loan products and has its own criteria. What might be a rejection from one could be an acceptance with a great rate from another.

Understand the types of loans available

Did you know the type of loan you choose can significantly impact your investment strategy? With a fixed-rate mortgage, you lock in a single rate for the life of the loan, offering predictability, which is especially appealing when current rates are low.

Alternatively, an adjustable-rate mortgage might start with a lower rate but can fluctuate over time. This could be ideal if you plan to sell or refinance within a few years. Familiarize yourself with your loan options to align your choice with your investment goals.

Make use of online tools

In the digital age, you’ve got a wide range of resources at your fingertips that can help you get better investment property mortgage rates. Online mortgage calculators allow you to play with different scenarios—changing the down payment, loan term, or interest rates—to see how each factor influences your monthly payment.

Comparison websites can also be a wealth of information, allowing you to evaluate market averages and what investment mortgage rates you might reasonably expect. Just be cautious, as some online tools may require personal information and could generate sales calls from lenders.

Ask about fees

Investment property mortgage rates are really just the tip of the iceberg when it comes to the overall cost of your mortgage. Lenders often add upfront costs like application fees, origination fees, and closing costs, among others. These fees can be negotiable, and they can also vary wildly between lenders.

Be sure to ask for a detailed list of all upfront fees and consider them when calculating the overall cost of your loan. Some lenders may offer a seemingly low rate but make up for it with high fees.

Negotiate

Did you know that investment property mortgage rates aren’t set in stone? Yes, mortgage rates can often be negotiated. If you’ve ever haggled at a flea market, you know that listed prices are often just a starting point. The same is true for interest rates for investment properties.

Arm yourself with quotes from various lenders and use them as bargaining chips. Even a slight decrease in your interest rate can save you thousands of dollars over the life of the loan.

Don’t be afraid to ask for a better rate or loan terms. It’s worth letting lenders know you’re shopping around—sometimes, that’s all it takes to get them to offer you a better deal.

Lock in your rate

Like we mentioned earlier, mortgage rates are not set in stone; they fluctuate based on a variety of economic factors. Once you’ve done your homework and found a rate you’re happy with, consider locking it in.

Rate locks usually last for 30 to 60 days, and they ensure that your rate won’t increase while you’re finalizing the property purchase. Some lenders might charge for this service, so be sure to ask beforehand.

Pros and cons of investment property mortgage loans

Compared to mortgages for primary residences, investment property loans have their own set of advantages and disadvantages. Here is a list of some of the main benefits and drawbacks.

Pros of investment property mortgage loans

  • You can finance a property that generates income for you. For example, you could borrow money to buy a rental property and earn rental income from tenants. This rental income can be used to pay off the mortgage while also building long-term wealth through property appreciation
  • You can borrow more than with a conventional loan. Loan limits are frequently well in excess of $1 million. A real estate investor, for example, can use a jumbo loan to purchase a high-end property and generate significant rental income. The investor can pay off the loan with the rental income and build up a lot of wealth over time
  • You don’t have to live in the property. Unlike many government-backed loans and programs for first-time home buyers, an investment property mortgage has no requirement that the property serve as your primary residence

Cons of investment property mortgage loans

  • You’ll pay more to borrow money. The higher interest rates on investment property mortgage loans can lead to a higher overall cost of borrowing when compared to primary residence loans. This can impact the profitability of an investment property and may require the investor to generate more rental income to cover the higher mortgage payments
  • You’ll face a larger down payment. In addition to higher interest rates, lenders typically require larger down payments for investment property loans, which can make it more challenging for investors to secure financing and enter the real estate market
  • Your finances will face more scrutiny. Lenders often have stricter lending criteria for investment property mortgage loans, including higher credit score requirements and lower debt-to-income ratios. This can make it more difficult for some investors to qualify for financing

Types of investment property mortgage loans

When buying a rental property, you’ll have access to many of the same financing options as you would for a primary residence or a second home mortgage loan. However, investors have several alternative lending options to consider.

Each lender will provide different investment property mortgage rates, so compare various offers to ensure you obtain the best deal available.

Check your investment property rates. Start here

Conventional loans

You can use a standard conventional loan (also known as a conforming loan) for an investment property. The minimum down payment is 15%, but 20% is recommended to avoid mortgage insurance.

Government-backed loans

You can buy an investment property with an FHA or VA loan if you choose a multi-unit property (2-4 units) and live in one of the units. These home loans come with minimum down payments as low as 3.5% for an FHA loan and 0% for a VA loan (when you meet eligible military service requirements).

Portfolio loans

Portfolio lenders can make up their own investment property loan rules. You may be able to put less down or finance more properties with these programs, but you should expect higher interest rates.

Non-warrantable condo loans

Suppose you’re drawn to a condominium that doesn’t meet conventional lending standards, known as a non-warrantable condo. In that case, non-warrantable condo loans may be your solution for purchasing this investment property.

Whether the issue is a single entity owning many units or too many rentals within the complex, by partnering with a lender that understands this niche market, you’ll be able to navigate the higher interest rates and more stringent qualifying requirements.

Hard-money loans

Private lenders and investors underwrite hard-money loans, which are short-term loans with high interest rates and steep fees. Still, these loan programs can be useful when you’ve found a great investment opportunity and need the money fast. The speed of financing is one of the only reasons to consider a hard-money loan. Most real estate investors can find better financing options with another loan type.

Commercial loans

Finally, there are commercial residential loans for those who want to borrow solely against the income of the property or buy projects with more than four units. They can be expensive and complex to set up. You will probably have to establish a single-asset bankruptcy remote entity, which prevents property owners from siphoning off rental income without paying the mortgage.

DSCR loans

If you’re eyeing an investment property, a DSCR loan could be a suitable financing option. A commercial lender will analyze your debt service coverage ratio (DSCR) to ensure that the property’s net operating income can cover the loan repayment.

By dividing the net income by the total debt service, they’ll ascertain whether you have the financial stability to manage the commercial loan. A ratio of 1 or higher is often seen as promising, opening doors for you to secure the property.

How to get an investment property mortgage

Acquiring an investment property mortgage isn’t as daunting as it might seem. Here’s a step-by-step guide to help you know what to expect.

  • Determine your investment goals. Understand what you want from your investment property. Are you looking for a long-term rental, a fix-and-flip, or something else? This will help shape the type of loan you’ll need
  • Check your credit score. Lenders will look closely at your credit score. Make sure it’s in good shape, and if needed, take some time to improve it. The better your credit, the more favorable your loan terms will be
  • Assess your financial situation. You’ll likely need a higher down payment for an investment property, often around 20–25%. Ensure you have the funds and ability to meet your monthly mortgage payments
  • Shop around for lenders. Speak with multiple lenders to understand the types of loans available. Explain your investment plans and ask for their best rates and terms. Don’t hesitate to negotiate
  • Get pre-approved. A pre-approval letter gives you credibility as a buyer and helps you understand how much you can borrow. It will make the process smoother once you find the right property
  • Find the property. Work with a real estate agent experienced in investment properties. They can guide you to suitable options that align with your investment goals. Once you find the right property, make an offer and formally apply for the mortgage. Provide all required documents promptly, and stay in close communication with your lender

Remember, investing in property is both an exciting and serious financial decision. Aligning yourself with knowledgeable professionals, such as mortgage brokers and real estate agents who specialize in investment properties, can provide valuable guidance throughout the process. Stay diligent, do your homework, and that investment property will soon be yours!

Alternative investment property financing

Along with the options mentioned above, there are other ways to finance investment properties.

  • Home equity loan or line of credit (HELOC): If you have equity in your primary residence or another property, you can borrow against that equity to finance an investment property. Home equity loans and HELOCs often have lower interest rates than conventional investment property loans but put your primary residence or other property at risk if you default on the loan
  • Cash-out refinance: Suppose the current rates are more favorable than what you have on your existing mortgage. In that case, you might think about a cash-out refinance, where you borrow more than your outstanding balance and keep the difference. This extra cash could cover all or part of the down payment on a rental property.
  • Bridge loan: For those who are house flipping, a bridge loan can be a handy solution. It’s a short-term loan that you can use on a property you plan to sell. Although the rates and costs tend to be higher than standard investment property mortgages, a bridge loan offers the advantage of securing financing for the property even if it’s already on the market.
  • Seller financing: In some cases, the seller of the property may be willing to finance the purchase, either in whole or in part. This can be an attractive option if the seller is motivated to sell and you can negotiate favorable terms. Keep in mind that seller financing usually involves a higher interest rate and a shorter repayment term compared to traditional loans
  • Real estate partnerships: Partnering with other investors or pooling resources with friends and family can help you finance investment properties. In a real estate partnership, each partner contributes funds and shares in the profits and losses of the property
  • Real estate crowdfunding: This method allows you to pool your money with other investors to finance investment properties. There are many online platforms that facilitate real estate crowdfunding, offering opportunities to invest in various types of properties and projects

Each financing method has its pros and cons, so it’s important to evaluate your financial situation, investment goals, and risk tolerance before choosing the best option for you.

FAQ: Investment property mortgage rates

Check today's investment property mortgage rates. Start here

Are mortgage rates higher for investment properties?

Yes, mortgage rates are almost always higher for investment properties. Investment property mortgage rates for a single-family building are about 0.50 to 0.75 percent higher than owner-occupied residence loan rates. If you’re purchasing a 2-4 unit building, expect the lender to tack at least another 0.125 to 0.25 percent onto your interest rate.

Can you get a 30-year loan on an investment property?

Yes, you can get a 30-year loan on an investment property. 30-year mortgages are actually the most common type of loan for second homes. However, terms of 10, 15, 20, or 25 years are also available. The right loan term for your investment property will depend on your purchase price, interest rate, and monthly budget. A higher interest rate or shorter loan term will mean higher monthly payments. A 30-year loan on your investment property will generally mean lower monthly payments but more interest paid over the life of the loan.

Can I get a mortgage for an investment property?

Whether or not you can qualify for a mortgage on an investment property depends on your financial portfolio. You’ll need a credit score of at least 640, though you probably want your score above 700 to qualify for a lower interest rate. You’ll also need a down payment of at least 15 to 20 percent and significant cash reserves.

How much do you have to put down for an investment property?

The minimum down payment for a 1-unit investment property is 15 percent for conventional loans. However, it will come with mortgage insurance and higher rates. Make a 20 percent down payment to bring down costs. For a 2-4 unit home, the minimum down payment is 25 percent. If you are buying 2-4 units and can live in one of them, you can use an FHA loan with as little as 3.5 percent down.

Are there investment property loans available with 10 percent down?

You can buy a 2-4 unit home, live in one unit, and use an FHA loan with 10 percent down. Otherwise, there may be individual banks and lenders that offer proprietary programs with 10 percent down. Additionally, the seller could carry the financing and allow a 10 percent down payment. There are no conventional loan options (Fannie Mae and Freddie Mac) at 10 percent down.

Are there zero-down rental property loans?

These exist but will be tough to get. The only viable way is to buy a multi-unit property and live in one unit. Use an FHA loan, then get gift funds from an eligible donor for the 3.5 percent down. There are also hard-money loans, lease-to-buy options, and going in on the home with an investment partner who has a down payment. If you’re a veteran or service member, you may be able to buy a multi-unit property with a zero-down VA loan, as long as you plan to live in one of the units while renting the others out.

Can a home equity loan finance an investment property?

A homeowner could use money from a cash-out refinance, home equity loan, or home equity line of credit (HELOC) for any purpose, including financing an investment property. For many investors, a second mortgage on their primary residence could generate enough cash for a down payment on a new property loan. However, the amount of equity in your current home would put a limit on you.

How do you find good investment properties?

A real estate agent in your area could help you find rental properties to buy. You could also find properties on Realtors’ sites online or by driving around your region in search of real estate signs.

Is there an easier way to own an investment property?

Perhaps the easiest way to obtain a rental is to buy a primary residence, live in it for at least a year, and then convert it into a rental. You move out, rent the home, and then rent or buy a separate residence. You keep your lower interest rate since you originally acquired it as an owner-occupied residence. It’s much easier to cash flow a property with this method.

Can I make money with a rental or investment property?

Whether or not you make money on a rental property depends on many factors specific to your financial situation and the investment property itself. Keep in mind that the promises of big returns can be deceptive once you tally up closing costs, origination fees, property taxes, title and homeowners insurance, real estate agent commissions, initial renovation costs, and ongoing maintenance.

What are today’s investment property mortgage rates?

Mortgage rates for investment properties are higher than those for primary residences because lenders view them as higher-risk.

Still, rental properties are usually a sound investment in the long run, and a slightly higher rate might not matter much when compared to the returns you’ll see on the property. Plus, every applicant is different.

The best way to get your current investment property mortgage rate is to get quotes from multiple lenders and make them compete. Rates change all the time, so contacting lenders online is the quickest way to get a fistful of rates to compare.

Time to make a move? Let us find the right mortgage for you


Gina Freeman
Authored By: Gina Freeman
The Mortgage Reports contributor
With more than 10 years in the mortgage industry, and another 10 years writing about it, Gina Freeman brings a wealth of knowledge to The Mortgage Reports as its Associate Editor. Gina works with a team of world-class real estate and finance writers to bring timely and helpful news and advice to the audience. Her specialty is helping consumers understand complex and intimidating topics.
Ryan Tronier
Updated By: Ryan Tronier
The Mortgage Reports Editor
Ryan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.
Paul Centopani
Reviewed By: Paul Centopani
The Mortgage Reports Editor
Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.