How Much Down Payment Do You Need for an Investment Property?

This is the first question nearly every new investor asks, and the reason the answers online conflict is that people are quoting different loan types without saying so. There is no single number. There is a range, and where you land in it depends on the loan program, the unit count, your credit, and whether you plan to live in the building. Let me lay out the whole map.

If you qualify on your personal income and tax returns, Fannie Mae and Freddie Mac will finance a single-unit investment property with 15% down. In practice most investors put 20% or more, because at 15% you pay mortgage insurance and take a meaningfully worse rate — the pricing hit for a 15% down investment loan is steep enough that the extra 5% often pays for itself quickly. For two-to-four unit investment properties, the floor jumps to 25%. Conventional financing also caps you at ten financed properties, which is the wall most serious investors eventually hit.

A DSCR loan qualifies on the property’s rent rather than your income, and typically asks 20–25% down. The number moves with your credit score and how strongly the property cash-flows. There is a lever here that conventional financing does not have: because DSCR is rent divided by payment, a larger down payment shrinks the payment and raises the ratio. If a deal comes in just under the lender’s minimum, adding a few percent to the down payment can push it over the line. The DSCR down payment guide works through that math in detail.

• Two-to-four units, conventional and non-owner-occupied: 25% down.
• Two-to-four units, DSCR: usually 20–25%, and the rent from all units counts toward qualification.
• Five or more units: you leave residential lending entirely — see apartment building loans, where 25–30% is the norm.
• Short-term rentals: expect the higher end of any range, since lenders discount projected nightly revenue.

If you are willing to occupy one of the units for a year, the rules change completely. An FHA loan on a two-to-four unit property you live in can go as low as 3.5% down, and conventional owner-occupied options start around 5%. You collect rent from the other units while your down payment stays small. This is house hacking, and it is the single most efficient way to start a portfolio — the trade is that you have to actually live there, and lenders do verify occupancy.

Credit score below 700, a short-term rental strategy, a condo or non-warrantable project, a property needing significant work, or a borrower already holding several financed properties will each push the requirement upward. Conversely, a strong score, a long-term lease already in place, and healthy reserves pull it down. Reserves matter more than people expect — many lenders will trade a slightly smaller down payment for six months of payments sitting in the bank.

Your down payment is not your cash requirement. Add closing costs of roughly 2–5% of the purchase price, the reserves the lender wants to see after closing, and enough working capital to carry a vacancy or a surprise repair. I have watched more deals fall apart over thin reserves than over an inadequate down payment.

Send me the property, the unit count, and what you have available to put in. I will show you the down payment under each program side by side, with the payment and the cash-on-cash return next to it, so you can pick on the numbers rather than on a rule of thumb.