How Investor Loans Differ from Primary Loans

Every guideline gets stricter when the property isn't your primary residence:

  • Down payment: 15–20% minimum for 1-unit, 25% for 2–4 units.
  • Credit score: 620+ minimum, 680+ for best pricing.
  • Rate premium: 0.50–0.875% above primary residence loans.
  • Reserves: 6 months of PITI on the subject property required in liquid funds after closing, plus 2 months on every other financed property you own.
  • DTI: 45% max, sometimes 50% with strong reserves.
15–20%
Min down (1-unit)
25%
Min down (2–4 unit)
75%
Of rent counted
10
Conv property cap

How Lenders Count Rental Income

Lenders count 75% of expected rent toward your qualifying income (the 25% haircut covers vacancy and maintenance). Two sources for the rent number:

  • If the property is rented: the lease agreement.
  • If vacant or owner-occupied at sale: the appraiser's market rent estimate (Form 1007).

For properties you already own, lenders use your Schedule E over the past two years — actual reported income (not the 75% rule). If you've shown losses on Schedule E for depreciation purposes, those losses can hurt your qualifying. Talk to your CPA about this before applying.

💡
The 75% Rule

Lenders count 75% of expected rent as qualifying income. The 25% "haircut" covers vacancy and maintenance — bake it into your own pro-forma too.

Fannie/Freddie Property Limits

Conventional financing caps you at 10 financed properties per person across all of Fannie Mae and Freddie Mac. After that you need:

  • DSCR loans (Debt-Service Coverage Ratio) — qualify on the property's rental income alone, not your personal income
  • Portfolio lenders — small banks holding loans in their own books
  • Commercial bridge loans for short-term holds

DSCR Loans: The Investor Workhorse

DSCR loans qualify based on whether the property's monthly rent covers the new mortgage payment (PITI). Common requirements:

  • DSCR ratio of 1.0–1.25 (rent ≥ 100–125% of PITI)
  • 20–25% down
  • 660+ credit score
  • No personal income or employment verification
  • Closes in entity name (LLC) — usually preferred
  • Rate premium: ~0.5–1.0% above standard Conventional investor pricing
🌴
Florida Investor Reality

Insurance on a South Florida 4-plex can be 40% of the mortgage payment. Property tax reassessment at transfer is another hit. Underwrite conservatively.

Florida Investor Considerations

  • Insurance cost is the most underestimated number. A South Florida 4-plex's insurance can be 40% of the mortgage payment.
  • Property taxes spike at the next assessment after you buy — Florida's Save Our Homes cap only applies to primary residences.
  • Short-term rentals (Airbnb/Vrbo) face HOA restrictions, county licensing, and lender financing limits. Many lenders won't finance properties used primarily for short-term rental.
  • Hurricane impact protection on rental properties is increasingly required by insurers — count it as a capital expenditure.

Build the Portfolio Right

The biggest investor mistakes we see:

  • Buying with too little reserve and losing a property in a vacancy stretch
  • Underestimating insurance and capex (budget 8–15% of rent for capex over time)
  • Maxing out personal Conventional slots before learning the DSCR market
  • Holding properties in personal name when an LLC structure would protect assets

Talk to a CPA and an attorney before scaling beyond 2–3 properties. The right structure matters more than another point of leverage.

Scaling beyond Conventional limits? Ask us about DSCR loans.

Talk Investor Financing →

Ready to talk through your options?

Get a free, no-pressure rate quote from a licensed Florida mortgage advisor. No application fee, no obligation.

Get Pre-Approved Free → Speak With an Advisor