Investment Property Financing: What Realtors Need to Know About DSCR and Investor Loans
Investment property financing has different rules than primary residence financing — higher down payments, reserve requirements, and rental income documentation. DSCR loans have made investor financing more accessible.
What You'll Learn
- Down payment requirements for investment properties
- How rental income is calculated for qualification
- DSCR loans and how they work
- Reserve requirements for investors with multiple properties
- LLC vesting for investment properties
The Full Explanation
CTC Processing processes a high volume of DSCR and conventional investor files. Understanding which loan type fits which investor helps Realtors match their clients with the right LO.
Frequently Asked Questions
What is the minimum down payment for an investment property?
Conventional: 15% down for 1-unit, 25% for 2–4 units. DSCR: typically 20–25% down. FHA allows investing in 2–4 units if the buyer occupies one unit. VA: eligible on up to 4 units if veteran occupies one.
What is a DSCR loan and who is it best for?
DSCR (Debt Service Coverage Ratio) loans qualify based on the property's rental income vs. PITIA payment — not the borrower's personal income. Ideal for self-employed investors, high-income borrowers with complex tax returns, and LLC vesting.
Can an investor buy in an LLC?
Yes — DSCR and some portfolio lenders allow LLC vesting. Conventional Fannie/Freddie generally requires individual vesting. CTC identifies the right lender for LLC-vested purchases at intake.