5 Best Investment Property Loan Providers
Tom has 15 years of experience helping small businesses evaluate financing and banking options. He shares this expertise in Fit Small Business’s financing and banking content.
This article is part of a larger series on Business Financing.
Investment property loans are often found through online mortgage providers, investor-only lenders, and larger banks. Investment mortgages typically range from $75,000 to more than $2 million, requiring a minimum down payment as high as 25%. These rental property loans often have higher interest rates than conventional mortgages due to the perceived risk that the borrower may walk away and stop making payments on the property if it’s not profitable or not sufficiently appreciating.
We reviewed several different lenders who offer investment property loans. Our criteria for review included down payment requirements, the amount that the lender will approve, interest rates, and the length of the underwriting process. Based on these criteria, here are our recommendations for the five best investment property loan providers:
Lender | Best for |
|---|---|
Competitive rate and approval time | |
Commercial investment properties | |
Using a conventional bank to get financing | |
Customer service | |
Rehab home loans |
PennyMac: Competitive Rate and Approval Time
 | |||
Minimum Amount | $125,000 | Minimum Credit Score | 680 |
Down Payment | 15% to 25% | Approval | As soon as 30 days |
PROS | CONS | ||
Rates tend to be more competitive | Higher credit score requirements | ||
Generally fast approvals and funding | Has a cash reserve requirement | ||
Will finance multifamily units | Does not do commercial investment property | ||
Why We Like PennyMac: PennyMac offers several mortgage options for investment properties. Its customer service and underwriting process for these types of mortgages receive good reviews online. PennyMac’s target market is people with good credit and sufficient cash reserves. Note that PennyMac doesn’t offer commercial investment property financing.
Lendio: Best for Commercial Investment Property Financing
 | |||
Minimum Amount | $250,000 | Minimum Credit Score | 600 |
Down Payment | 25% to 30% | Approval | As soon as 45 days |
PROS | CONS | ||
Marketplace offers potential for competitive offers | Potential for relatively high interest rates if credit score is not good | ||
Fast application process | Higher down payment for commercial properties | ||
Why We Like Lendio: Lendio is a business financing platform that matches applicants to more than 75 funders. Lendio can offer multiple options for those seeking investment property loans and is one of a few that actively promotes offerings for commercial investment real estate. It’s worth noting that the requirements for down payments on residential properties will be reduced compared to commercial real estate.
PNC: Best Conventional Bank Option
 | |||
Minimum Amount | $100,000 | Minimum Credit Score | 620 |
Down Payment | 3% to 20% | Approval | As soon as 45 days |
PROS | CONS | ||
Financing options available for residential and commercial investment properties | Possibly higher down payments for some loan options | ||
Online application process | Significant experience required for commercial real estate financing | ||
Will finance as little as $100,000 | |||
Why We Like PNC: Among conventional banks that offer mortgages, PNC’s terms and qualifications are some of the fairest. Residential investment loans can be financed with as little as 3% down on single-family residences for borrowers with excellent credit and low debt exposure. Commercial investment real estate options are also available for those with strong finances and experience in managing property.
Quicken Loans: Best Customer Service
 | |||
Minimum Amount | $100,000 | Minimum Credit Score | 620 |
Down Payment | 3% to 20% | Approval | As soon as 30 days |
PROS | CONS | ||
3% down available for highly qualified borrowers | Financing only available for up to four units | ||
Customized financing available | Possibly higher down payment requirements if credit is not very strong | ||
Why We Like Quicken Loans: One of the advantages of Quicken Loans is its ability to develop customized fixed-rate mortgage products based on the borrower’s needs. While down payment requirements may reach as high as 20%, depending on the borrower’s credit score, highly qualified borrowers can be able to receive financing on a single-family investment property with as little as 3% down.
LendingOne: Best for Rehab Home Loans
 | |||
Minimum Amount | $75,000 | Minimum Credit Score | 620 |
Down Payment | 10% to 20% | Approval | As soon as two weeks |
PROS | CONS | ||
Will finance up to 90% of home’s value | Some rehab loans could have draw fees | ||
Fast approval times | No commercial investment option | ||
Why We Like LendingOne: Investors seeking to rehabilitate homes can utilize LendingOne’s rehab loan home options. Between lines of credit and term loans, LendingOne offers flexibility for properties of four or fewer units. LendingOne will finance up to 90% of the home’s value for qualified borrowers.
Tips for Getting Investment Property Loans
Getting an investment property loan isn’t the same as buying a primary residence. The requirements to obtain financing are often stricter, and the interest rate is often higher. To secure rental property financing, both the buyer and property have to be approved by the lender.
There are a few additional steps the buyer should take to improve the odds of approval.
1. Review Your Credit Profile
Check your credit report for discrepancies and outdated information. Work to have those items removed if possible. You can get a free copy of your credit report once a year from the three major credit bureaus, Experian, TransUnion, and Equifax, at AnnualCreditReport.com or sites like Nav.
2. Organize Your Financial Paperwork
Gather your last three years of tax returns, your last two pay stubs, your driver’s license, Social Security card, as well as any bank account and investment statements. If self-employed, include any business financial statements and documents. Doing this before your application will save time in the underwriting process.
3. If It’s Your First Investment Loan, Start Small
If you’re buying your first rental property, you may want to consider a single-family home or a two-unit townhouse to help build your experience. Developing this experience can improve your chances of receiving financing on larger properties. If you have managed rental property before, consider how a potential purchase aligns with your portfolio and long-term goals.
4. Shop Around
Talk to multiple lenders and research options online to find the best deal, looking at both online lenders and traditional banks. Compare financing terms and ask prospective lenders about approval time, fees, down payment requirements, and if they service the mortgage after approval and funding.
5. Get a Lender Preapproval
Having a preapproval makes you more competitive when you submit an offer on a rental property. A preapproval will put you further ahead in the underwriting process since you’ll have provided initial information to a lender, and they’ll have extended an initial commitment. It also can give you peace of mind, knowing that your odds of getting the home funded have increased.
6. Find a Property
Choose a real estate agent who has experience working with investors. When you find a property, do your due diligence. If you’re purchasing a current rental property, obtain the lease information and details on the condition of the home. When you have an accepted offer, bring your purchase and sales agreement to your lender, who’ll then order an appraisal and title search.
Bottom Line
Provided you have acceptable credit and sufficient cash for a down payment, there are several options for obtaining a mortgage for a rental property. Those getting into investment real estate for the first time should start with a single-family home or small townhouse before attempting to obtain larger financing. It’s important to shop around, do research, and have your finances in order before you attempt to obtain an investment property loan.
