Current Investment Property Mortgage Rates: August 2026
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You’ll typically pay anywhere from a half to a full percentage point more for investment property mortgage rates compared to primary residence rates.
The additional amount helps to cover the extra risk lenders take that you might default on your monthly payments.
To get a sense of how much your investment property mortgage rate could be, let’s take a look at current mortgage rates:
- You’ll typically pay more for investment property mortgage rates compared to rates for a primary residence.
- There are things you can do to help reduce the cost markup, however, like shopping with multiple lenders.
- Conventional lenders offer investment property mortgages, while government-backed loan programs do not.
Why are investment property mortgage rates higher?
Investment property mortgage rates are generally a half to a full percentage point higher than the mortgage rates on residential homes because mortgage lenders are exposed to more risk when they make investment property loans.
During times of financial hardship, tenants may not pay rent, the owner may struggle to afford repairs or the property may be vacant for an extended period of time. To cover the extra risk of mortgage default, lenders charge higher rates for loans on rental properties or other investment properties.
In most cases, only conventional mortgage lenders offer investment property loans. Government mortgage programs — such as FHA loans insured by the Federal Housing Administration, VA loans backed by the U.S. Department of Veterans Affairs and USDA loans guaranteed by the U.S. Department of Agriculture — only allow you to finance a home you’ll live in as your primary residence.
However, there are some streamline government refinance programs that allow you to refinance a primary residence that’s being converted to a rental property — if you currently have an FHA or VA loan.
Why compare investment property mortgage rates?
Investment property mortgage rates can vary significantly from one lender to another. Comparing multiple offers can help you find a lower rate, reduce your upfront costs and choose loan terms that better fit your real estate investment strategy.
When you compare investment property loans, look beyond the interest rate. Review each offer’s annual percentage rate (APR), lender fees, discount points, down payment requirements and estimated monthly payment.
Comparing lenders may help you:
- Find a more competitive rate. Even a small rate difference can affect your monthly payment and total borrowing costs.
- Lower your closing costs. Lender fees and discount points can vary between offers.
- Evaluate different loan options. Some lenders may offer more flexibility based on your credit, property type, rental income or number of financed properties.
How do lenders set investment property mortgage rates?
Your credit score and loan-to-value (LTV) ratio (which measures the percentage of your home’s value being financed by the mortgage) carry the most weight when it comes to investment property loan rates.
How to get the best investment property mortgage rates
- Boost your credit score. If your credit score needs some work, take some time to improve your score before applying for an investment property loan. The best mortgage rates are typically offered to those homebuyers with excellent credit scores — 780 or higher.
- Save for a bigger down payment. Fannie Mae’s guidelines give a cost break to investment property loan borrowers who have at least 30% equity in their property. With that in mind, you can take steps to reduce your rate with a higher down payment on the home.
- Reduce your existing debt. Your debt-to-income (DTI) ratio compares your monthly debt payments to your monthly gross income and shouldn’t exceed 43%, in most cases.
- Shop around for a loan. Gathering quotes from more than one lender can also save you money. Borrowers who get quotes from multiple lenders stand to save an average of $62,572 on interest over the life of a 30-year mortgage, according to LendingTree data.
Want to improve your credit score? The LendingTree app will show you your current score and deliver personalized improvement insights straight to your inbox.
Investment property loan requirements
| Mortgage type | Minimum down payment | Minimum credit score | Maximum DTI ratio | Maximum number of units |
|---|---|---|---|---|
| Fannie Mae investment property loan | 15% to 25% | Varies by lender | 45% | Four |
| Freddie Mac investment property loan | 15% to 25% | Varies by lender | Not specified | Four |
Other ways to finance an investment property
A traditional investment property mortgage isn’t the only way to fund a purchase or cover the down payment. Depending on your finances and available home equity, you may also consider the following options. Keep in mind, though, that some of these products may be secured by another asset, such as your primary residence.
- Home equity loan. If you’re sitting on a chunk of equity in your primary residence, you may want to take out a home equity loan to help fund the larger investment property down payment requirement. Home equity loan rates are usually fixed, and you’ll receive the funds all at once.
- Home equity line of credit. Known as a HELOC for short, this option works like a credit card secured by your home equity. You can use as much or little as you want (up to your line’s limit), pay the balance down and reuse the credit line for a set period of time.
- Cash-out refinance. If current rates are lower than what you’re paying on your first mortgage, consider borrowing more than you owe and pocketing the difference with a cash-out refinance. You can use the funds to pay for some or all of the down payment on an investment property.
- Bridge loan. If you’re in the fix-and-flip business, a bridge loan can provide a short-term loan secured by the home that you intend to sell. Rates and costs are usually higher than with regular investment property loans, but bridge loans allow you to get financing on the property — even if you plan to put it on the market.
- Debt service coverage ratio (DSCR) loan. If you have plenty of cash for a down payment, but you don’t want the hassle of income documents, a type of nonqualified mortgage called a DSCR loan may get you the money you need without the extra paperwork.
- Hard money. If your credit scores are too low for the financing types above but you have a stockpile of cash for a down payment and closing costs, a hard money loan may be worth a look. Hard money lenders typically don’t take your credit score into account, since the loan is secured by a “hard” asset like real estate. Expect high rates and mortgage points with this type of loan, and watch for prepayment penalties.
If you rent out your second home each year for 14 days or less (not uncommon in the age of Airbnb rentals), the house is considered a personal residence and you can keep the rental income tax-free. An added bonus: You can take advantage of the mortgage interest deduction for a second home.
Note that doing so won’t affect your interest rate — but it could put some extra cash in your pocket.
Pros and cons of investment property loan rates
Pros
- You can finance a property that earns you income
- You can deduct mortgage interest as a business expense
- Higher down payment requirements may mean you don’t have to pay private mortgage insurance (PMI) premiums
Cons
- You’ll pay a higher rate than for a primary residence mortgage
- You’ll need to meet stricter underwriting requirements, including making a bigger down payment
- You likely can’t take advantage of government-backed mortgage programs
Frequently asked questions
The average mortgage rate on an investment property loan will vary according to current market rates. However, as a rule of thumb, you can anticipate investment property mortgage rates being a half to a full percentage point higher than average mortgage rates for a primary residence.
Most conventional loan lenders limit your DTI ratio to 45%. You can use LendingTree’s home affordability calculator to see how expensive an investment property you can afford at different DTI ratios.
In some respects, it’s harder to get an investment property loan than it is to get a mortgage for a primary residence. You’ll often need a stronger credit score and a larger down payment.