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Dawn Papandrea is a credit card expert with 10+ years of experience covering credit cards, banking, personal finance and careers. Her reviews of credit cards and other financial products appear on The Balance, Investopedia, and on personal finance sites elsewhere. Dawn earned her master's in journalism and mass communication from New York University and has a bachelor's in English from St. John's University.
Updated September 08, 2024 Fact checked by Fact checked by Betsy PetrickBetsy began her career in international finance and it has since grown into a comprehensive approach to journalism as she's been able to tap into that experience along with her time spent in academia and professional services.
We reviewed 38 lenders and their loan programs to select the best investment property loan options. Rate was named the leader in three categories: best overall, best for new construction, and best for fast closing.
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. Choosing the right loan can impact the overall success of one’s investment.
Our research focused on the property types each loan can be used for, its down payment requirements, current interest rates and APRs, loan size minimums and maximums, and the length and complexity of the underwriting process. Here are our top picks.
Rate offers one of the fastest closing processes and a streamlined online application process, perfect for investors who see an opportunity and want to take advantage of it as soon as possible. We also like that Rate offers new construction loans, which not all lenders do.
Pros & ConsOriginally called Guaranteed Rate when founded in 2000, Rate is an online lender serving all U.S. states and offering several home loan programs, including those for investors. Borrowers can complete the entire application online, and the lender boasts a fast closing process, usually completed in three weeks.
Interest rates for investment property loans are about average compared to other lenders in our study. Borrowers must put down at least 15% for investment loans and Rate charges fees.
Rate has an A+ rating from and is accredited by the Better Business Bureau, but in J.D. Power’s 2023 U.S. Mortgage Origination Satisfaction Study, it had below-average scores.
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We chose Rocket Mortgage as the best for customer service because of its hands-on assistance as you complete the fully digital application. The process is very streamlined, and Rocket has top-notch ratings from J.D. Power and on customer review sites like Trustpilot.
Pros & ConsIn 1985, Rocket Mortgage was formed as a brick-and-mortar lender that later became Quicken Loans. Today, the company is known as Rocket Mortgage. Rocket was initially formed as Quicken’s fully online lending platform. In fact, it was the first lender to offer e-closings in all 50 states.
It stands out for its strong customer service, as evidenced by its top score in the J.D. Power 2023 U.S. Mortgage Servicer Satisfaction Study.
Rocket also scored 4.7 out of 5 stars on the customer review site Trustpilot.
While the loan application experience is generally positive, Rocket’s fees and interest rates may be higher than you’d get from other lenders. Plus, investment property buyers must provide a 25% down payment to qualify for a loan.
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If you’d prefer an investment property loan with a big bank with branches in your area, Bank of America (BofA) is our top choice. Not only do you get the convenience of a digital application and app to track the process, but you can also speak with a loan officer in person. Also appealing is its lower down payment requirement, making it a good contender for first-time investors who may not have access to large sums of capital.
Pros & ConsBofA is the second-largest U.S. bank and is licensed in all 50 states. It has a long history, founded in 1904. Though it has an above-average J.D. Power score (ranking fifth in the 2023 U.S. Mortgage Origination Satisfaction survey), the bank has had its share of challenges. A recent one was a 2023 Consumer Financial Protection Bureau (CFPB) lawsuit that resulted in the bank having to pay $12 million in fines for false mortgage data reporting.
BofA is a full-service financial institution offering a variety of home loans. Existing customers whose accounts qualify them for Preferred Rewards status may be eligible for an interest rate or fee reduction discount on their mortgage.
BofA does not publicly share its lender fees, but its interest rates are higher than the average in our study.
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Another accessible, traditional bank option for investment property loan borrowers is Flagstar Bank. Flagstar requires a 15% down payment, which puts loans within reach for many investors who might face steeper down payment requirements with other lenders.
Pros & ConsFlagstar Bank's roots date back to 1859 when it was a community bank in Queens, New York. Today, it’s the 28th largest bank in the nation, offering a full suite of banking products for consumers and businesses, including a home lending division.
Branches are located in just a handful of states, though Flagstar is licensed to operate in all 50 states. It does not appear in the J.D. Power rankings, and Trustpilot reviews are limited and largely negative.
For investors, home loan borrowing criteria are not as stringent as some other lenders. For example, investors may have up to a maximum 50% debt-to-income ratio and a minimum credit score of 620; however, they will need six months of cash reserves.
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Having a large cash reserve can make it difficult to get started when you’re already expected to spend significant money on an investment property. Movement Mortgage stood out since its three-month cash reserve requirement is among the lowest in our study.
Pros & ConsFounded in 2008, Movement Mortgage specializes in home loans and services all 50 states. The company claims it gives back by investing 40% to 50% of its profits back into communities.
Movement ranks sixth in J.D. Power’s 2023 U.S. Mortgage Origination Satisfaction survey.
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We chose Veterans United Home Loans as our best investment property lender for veterans because the firm specializes in VA-backed mortgages. VA loan rules can be tricky, especially for investment properties, so eligible borrowers should seek experts who understand this loan program better than anyone else.
Pros & ConsFounded in 2002, Veterans United is a full-service lender that specializes in VA loans for qualifying veterans, active service members, and their spouses. It is one of the largest VA mortgage lenders in the United States in terms of volume.
Investors benefit from flexible qualification guidelines, lower rates and monthly payments, no down payments, and no private mortgage insurance. Veterans United offers VA loans with as little as 0% down, which is a big deal since other types of investment property loans can require 15% or more down.
Most importantly, Veterans United understands the nuances of the VA loan and how to make it work for an investor while remaining within the program’s guidelines. Plan on around 32 days to close. Much of the initial pre-approval stage is completed online.
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. The VA loan cannot be used for an investment property if you don't meet these criteria.
Investment property loans have more stringent requirements than regular home loans, so shopping lenders carefully is crucial. Rate offers the fastest closing, competitive interest rates, and construction loans, making it our top choice among investment property lenders overall. When it comes to customer service, though, it’s hard to compare to Rocket Mortgage, as it offers an intuitive digital process and high customer satisfaction ratings.
Borrowers looking to put down less or with fewer cash reserves can find more flexibility through Bank of America or Movement Mortgage. However, those with veteran or military status shouldn’t hesitate to connect with Veterans United. Just note that VA investment loans require borrowers to reside at the property.
