Investment Property

Can I buy an investment property with a conventional loan?

Short answer

Yes — conventional is the standard mortgage path for investment properties. Down payment is typically 15% on a 1-unit and 25% on 2-4 unit investments. Rate is materially higher than primary residence due to LLPAs. Rental income usually counts toward qualifying at 75% of market or lease rent.

Plain-English explanation

Investment-property conventional financing: 1-unit investment: 15-20% minimum down, 6 months reserves on the subject property; 2-4 unit investment: 25% minimum down, often 6 months reserves on subject + 2 months on each additional financed property. Pricing: investment LLPA + LTV LLPA + credit LLPA stack to add 2-5% in points equivalent vs primary. Rental income: 75% of market rent (Fannie) or 75% of lease (similar Freddie rule), with adjustments for management experience. Subject to Fannie/Freddie guidelines.

Practical example

A Florida investor at 740 credit puts 25% down on a $400k duplex (loan $300k). Fannie's LLPA stack: investment + 2-unit + LTV adds roughly 2.5% in points equivalent, paid as discount points or higher rate. Rental income: $2,400/month gross, lender counts $1,800 (75%) toward qualifying. Reserves: 6 months on subject ($14k+), plus 2 months on the borrower's existing primary residence.