We recommend the best products through an independent review process, and advertisers do not influence our picks. We may receive compensation if you visit partners we recommend. Read our advertiser disclosure for more info. An investment property earns a profit for its investor. Investment property loans are a tool for an investor to maximize their returns by leveraging the down payment, the length of the payback terms, and the interest rate. Investors can further improve their returns by using investment loans to build where there is a need for affordable houses to rent, for instance, or to rehab a property to increase its value and cash flow.
However, investment properties are considered higher risk than residential loans for a personal residence. The logic behind this is that if something goes wrong and the property loses money for the investor, it’s easier to walk away from a property if it’s not your residence. We reviewed 19 lenders and their loan programs to select the best investment property loan options based on what property types they can be used for, their down payment requirements, their current interest rates and APRs, loan size minimums and maximums, and the length and complexity of the underwriting process. Here are our top picks.
6 Best Investment Property Loans of 2022
- Best Overall: Quicken Loans
- Best for Veterans: Veterans United Home Loans
- Best for Single-Family Homes: Citibank
- Best for Commercial Property: Lendio
- Best for Ground-Up Construction: Nationwide Home Loans Group, a division of Magnolia Bank
- Best for Rehab Loans: LendingOne
Best Overall: Quicken Loans
Why We Chose It: We chose Quicken Loans as our best overall investment property lender because they lend nationwide, offer a wide variety of loan types, and make applying for a mortgage online very easy for the borrower. Quicken provides competitive rates as well, which helps solidify its position as the best overall mortgage lender. Formed as a brick-and-mortar lender in 1985, then moving online between 1999 and 2001 as Rocket Loans, Quicken Loans’ rise paralleled the growth of the internet.
Quicken Loans is our best overall investment lender because they are easy to use for investors nationwide. They offer a large portfolio of loan products that can be tailored to your needs when you complete their online application. Quicken Loans lends on residential and multi-unit investment properties with fixed- and adjustable-rate home loans, mortgage refinancing, FHA, USDA, and VA loans, and jumbo loans for higher-priced homes. On conventional loans, Quicken offers down payments as low as 3% if you qualify for their agency loans. However, if your down payment is less than 20% you’ll have to pay Private Mortgage Insurance.
The current mortgage rates for a 30-Year Fixed loan carry a rate of 5.25% and an APR of 5.537%. For their 15-Year Fixed loan product, the rate is 4.625%, with an APR of 5.104%.1 Keep in mind, you can only get up to 10 conventional mortgages that offer these attractive rates and down payment options as stipulated by Fannie Mae guidelines.2 After you hit that ceiling, you’ll need to turn to bank alternate financing such as private equity and private or hard money lenders.
The loan minimum depends on the property type, but the loan maximum is up to $2.5 million for their jumbo loan program. Rocket Mortgage now acts as the online platform and loan processor for Quicken Loans. Rocket is the first lender to offer eClosings in all 50 states. 98% of their mortgages use Rocket technology that offers a fully automated and fast process.
Best for Veterans: Veterans United Home Loans
Why We Chose It: We chose Veterans United Home Loans as our best investment property lender for veterans because the firm specializes in VA-backed mortgages with experts who understand this loan program (and their specific consumer base) better than anyone else. Founded in 2002, Veterans United is a full-service lender that specializes in VA loans for qualifying veterans, active service members, and their spouses. They are one of the largest VA mortgage lenders in terms of volume in the United States. Investors benefit from flexible qualification guidelines, lower rates, and monthly payments, no down payments, and no private mortgage insurance. Veterans United has VA loans for as little as 0% down, and they understand how to make the VA loan work for an investor and still remain within the program’s guidelines.
In order for a VA loan to be used on an investment property purchase, it must be a multifamily property no larger than four units, and the investor must live in one of the units. This is a key point, and if you don’t meet this criterion, the VA loan cannot be used for an investment property. If you do follow this rule, however, you will enjoy the low down payment and low rate benefits this government program provides. Among the products offered are fixed and adjustable-rate mortgages, jumbo loans, refinance loans, and cash-out loans. Loan rates range from 4.625% to 5.5% with APRs between 4.991% and 6.117% depending on the loan product.3 Veterans United does not have a minimum loan amount declared. If the investor is using a VA loan, the VA only guarantees up to the county-specific loan limit. For most counties, the limit is $647,200, but for some high-cost areas, the limit reaches $970,800 for loans financing one unit.
Best for Single Family Homes: Citibank
Why We Chose It: We chose Citibank as our best investment property lender for single-family homes because it offers a full toolbox of home loan products for investors, more low down payment options than other lenders, and some of the lowest rates and fees in the industry. Founded in New York in 1812, Citibank provides a suite of tools that investors can use for different strategies to finance their single-family home income properties. The bank has mortgages with term lengths from five to 30 years. Both fixed-rate mortgages and ARMs are available. Citibank earned our best for single-family homes ranking because of its breadth of loan terms and its consistently low rates.
Their conventional loans lend up to $647,200 in most of the country and up to $970,800 in some high-cost areas. Above those prices, Citibank can meet your needs with a jumbo loan. Jumbo loans require higher credit scores, but allow borrowers to access larger loans often with higher Loan-to-Value ratios (LTV), if desired. Conventional mortgage have lower credit score requirements than a jumbo, Citi states you can get a conventional mortgage with a score as low as 620. Citibank finances residential, multi-unit, and commercial properties for investors who have exceeded the limits on regular mortgages.
Existing Citibank customers benefit from closing cost credits and rate discounts, but they must set up automatic monthly mortgage payments from their Citibank deposit account. Rates change daily current interest rates are 4.5% and 5.0%, with APRs at 4.816% and 5.186% for 15 and 30-year fixed-rate mortgages respectively.4 You can qualify for these rates and mortgages as long as you have not exceeded 10 mortgages, the limit set by Fannie Mae. For your 11th investment property purchase, you could consider wrapping your properties into a single blanket loan, where you make one payment applied to the debt on all ten properties combined. Then you would again become eligible for another conventional mortgage which will have lower interest than other options. If you do not consolidate the mortgages, you’ll have to turn to other options such as investor loans, private lenders, or hard money lenders. Generally, these choices have higher interest and often carry prepayment penalties The underwriting process should take 30 to 60 days. However, Citi doesn’t advertise the time frame. You may start a Citibank mortgage application over the phone, online, or, in some locations, in person. If you start online, you can be connected with a loan officer for pre approval.
Best for Commercial Property: Lendio
Why We Chose It: Lending One earns our nod for best rehab lender because they are one of the very few commercial lenders that make it easy to get a pre-approval letter, they finance up to 90% loan-to-cost and provide lower rates and fees than their competition. As a direct private real estate lender, Lending One has become the best rehab lender in the industry because they help investors get what had been missing in the market, such as pre-approval letters and proof of funds, higher leverage, and lower rates and fees.
Lending One offers fix-and-flip and rehab-to-rent loan products. Down payments range from 10% to 20%. For rehab to rent, they have a 30-year fixed-rate loan as well as 5/1 and 7/1 ARM loans. Their fix-and-flip loans can finance up to 90% of your repair costs. Two years of interest only payments are an option on the fix-and-flip loans too. Lending One loans on two- to four-unit properties only, including condos and townhouses. The loan minimum is $75,000. Interest rates and loan terms are underwritten based on your experience, income, credit, and LTV. Their fees are transparent, too. Fees and closing costs apply, but are not on the loan product page. They generally require a credit score of 680, but there may be some variation depending on product and situation.