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Conforming Loan amounts up to $766,550 | FHA Loan Limits are specific to each Florida County
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Investment Home Mortgage Rates

Investment properties appeal to those who seek to build wealth by, perhaps, flipping fixer-uppers or buying rentals. Find and compare current investment property mortgage rates from lenders in your area.

What Are the Advantages of Conforming Investment Home Mortgages?

No prepayment penalty ever
30yr, 25yr, 20yr, 15yr, or 10yr
Up to 43% debt to income ratio

What Are the Requirements?

Minimum credit score 700
Debt to income ratio under 43%
Minimum down payment of 15%
You plan on collecting rent from the property. If so, you may need to submit a lease agreement that confirms the property is occupied by a tenant.

Why are interest rates higher on investment or rental properties?

Your interest rate will generally be higher on an investment property than on an owner-occupied home because the loan is riskier for the lender. You’re more likely to default on a loan for a home that’s not your primary residence. That’s a good reason to use our investment property mortgage rate tool to compare prevailing interest rates that you qualify for.

In addition to paying higher investment property interest rates, it’s likely you’ll have to make a higher down payment. Conventional mortgages generally require at least 15% down on a one-unit investment property and 25% down on a two- to four-unit investment property. And loan terms are usually shorter than the typical 30-year residential mortgage. After all, it’s a business transaction, rather than a home purchase.

Pros

You don’t put your primary residence at risk, as you would if you financed a home equity loan or a HELOC against it to go toward your investment property purchase.
You may be able to use a portion of the projected rental income from the investment property to qualify for an investment mortgage.

Cons

You’ll have to make a higher down payment than you would for a primary residence. This could be as much as 25% for a multi-family property. Don’t forget to factor in closing costs and fees, too, when you’re figuring out your upfront costs.
Investment property interest rates are higher, and though you may be able to get a rental property mortgage with a credit score as low as 640, you’ll need a higher credit score to get the lowest possible rate.
Though it varies by lender, you’re likely to be required to have extensive cash reserves. This can be anywhere from four to eight months’ worth of mortgage payments, taxes, insurance and homeowners association fees. That may be calculated per property, which adds up fast if you already own other investment or rental properties.

Know the difference between interest rate vs. annual percentage rate, APR

It’s easy to confuse a mortgage interest rate and APR, but they’re quite different. The interest rate is the cost of borrowing money for the principal loan amount. It can be variable or fixed, but it’s always expressed as a percentage. An APR (annual percentage rate) includes the mortgage interest rate plus other costs such as broker fees, discount points and other lender fees, expressed as a percentage. APR is often higher than your interest rate.

What are the different types of mortgages?

Fixed-rate mortgages

Fixed-rate mortgages are the most common mortgage type. The interest rate remains the same for the life of the loan. With a fixed-rate mortgage, your monthly payment won’t change (outside of property taxes, insurance premiums or homeowner’s association fees).

Adjustable-rate mortgages

Adjustable-rate mortgages, or ARMs, have an initial fixed-rate period during which the interest rate doesn’t change, followed by a longer period during which the rate may change at preset intervals. Generally, interest rates are lower to start than with fixed-rate mortgages, but they can rise, and you won’t be able to predict future monthly payments.

Jumbo mortgages

Jumbo mortgages are conventional loans that have non-conforming loan limits. This means the home prices exceed federal loan limits. For 2021, the maximum conforming loan limit for single-family homes in most of the U.S. is $548,250, according to the Federal Housing Finance Agency. Jumbo Mortgages are more common in higher-cost areas and generally require more in-depth documentation to qualify.

Government-insured loans

Government-insured loans are backed by three agencies: the Federal Housing Administration (FHA Mortgages), the U.S. Department of Agriculture (USDA Mortgages) and the U.S. Department of Veterans Affairs (VA Mortgages). The U.S. government isn’t a mortgage lender, but it sets the basic guidelines for each loan type offered through private lenders.

Choosing the right mortgage

Narrowing your mortgage choices can be difficult. Here’s a list of pros and cons of each of the options mentioned earlier to help you decide.


	PROS	CONS	WHO IT’S BEST FOR
Fixed-rate mortgages	Pros Rates and payments remain constant, despite interest rate changes. Stability makes it easier to budget. Simple to understand.	Cons Interest payments tend to be higher. To get a lower rate, borrowers have to refinance the loan — and pay closing costs again.	Who it’s best for Borrowers who plan to stay in a home many years and want predictable, stable payments at the same interest rate for the life of the loan.
Adjustable-rate mortgages	Pros Feature lower rates and payments early in the loan term. May qualify for more house because payments are lower (initially). Help you save and invest more money with a lower payment early in the loan.	Cons Rates and payments can rise over the life of the loan. Higher rates — and payments — when loan resets can be hard to manage. ARMs are difficult to understand. Lenders have much more flexibility to customize.	Who it’s best for Borrowers who don’t plan to stay in a home for more than a few years — especially when rates are higher.
Conforming mortgages	Pros Can be used for a primary home, second home or investment property. Overall borrowing costs tend to be lower than other loan types. PMI is cancellable once you’ve gained 20 percent equity. Put as little as 3 percent down for agency loans.	Cons Minimum FICO score of 620. Debt-to-income ratio of 45 to 50 percent. PMI typically required if your down payment is less than 20 percent. Significant documentation required to verify income, assets, down payment and employment.	Who it’s best for Borrowers with strong credit, a stable income and employment history, and a down payment of at least 3 percent.
Government-insured mortgages [ FHA, VA USDA ]	Pros More relaxed credit requirements. Don’t require a large down payment. Open to repeat and first-time buyers.	Cons Mandatory mortgage insurance premiums that cannot be canceled on some loans. Higher overall borrowing costs. May require more documentation to prove eligibility.	Who it’s best for Borrowers who have low cash savings, less-than-stellar credit or can’t qualify for a conventional loan. VA loans tend to offer the best terms and most flexibility compared to other loan types for military borrowers.
Jumbo mortgages	Pros Borrow more money to buy a home in an expensive area. Interest rates tend to be competitive with other conventional loans.	Cons Down payment of at least 10 to 20 percent is needed. Minimum FICO score of 660, but average is typically 700 or higher. Maximum DTI ratio of 45 percent. Must have significant assets (10 percent of the loan amount) in cash or savings accounts.	Who it’s best for Affluent borrowers purchasing a high-end home who also have good to excellent credit, high incomes and a substantial down payment.