Investment Property Loans for Self-Employed Borrowers

Investment Property Loans

Investing in real estate can be one of the best ways to build long-term wealth. Whether you’re purchasing a single-family rental, a condo, a duplex, or a property with an accessory dwelling unit (ADU), the right financing strategy is key. Unlike owner-occupied mortgages, investment property loans come with their own rules, rates, and qualifying standards — but there are more options than ever before for savvy investors.

What Counts as an Investment Property?

An investment property is typically any 1–4 unit residential property that you purchase for income or appreciation, rather than as your primary residence. This includes:

Single-family homes
Condominiums and PUDs (Planned Unit Developments)
Duplexes, triplexes, and fourplexes
Homes with ADUs (garage conversions, in-law units, casitas)
Properties used for short-term rentals (Airbnb, VRBO)

Because these properties are considered “non-owner occupied,” lenders treat them differently than primary residences.

Loan Options for Investment Properties

1. Conventional Loans for Investors

Conventional mortgages (Fannie Mae and Freddie Mac) can be used for investment properties — but with different requirements than owner-occupied homes:

Higher down payment: Usually 20–25% minimum.
Stricter credit standards: A Higher credit score is often required.
Higher interest rates: Typically 0.5%–1% above primary residence loans.
Reserves required: Lenders may require that you demonstrate several months of mortgage payments in reserve.

Conventional loans work well if you have strong credit and good income documentation.

2. DSCR (Debt Service Coverage Ratio) Loans

For many investors — especially those who are self-employed or have complex income — a DSCR loan can be the ideal choice. Instead of focusing on your personal income, the lender looks at the property’s rental income vs. expenses.

No personal income verification. Approval is based on whether the property can cover its mortgage payment.
Great for portfolio investors or those with multiple properties.
Works with short-term rentals. Lenders may allow projected Airbnb/VRBO rental income to qualify.
Flexible ownership: Can be made in your name or in an LLC.
Nationwide: We have the ability to originate DSCR loans throughout the U.S.

If you’re building a rental portfolio or don’t want your personal income to limit your financing, DSCR loans open the door. In fact, they are one of the most popular investor loans right now.

3. Loans for Properties With ADUs and Short-Term Rentals

Accessory Dwelling Units (ADUs) and short-term rentals are becoming more common in California and other high-cost markets. Lenders are beginning to adapt:

ADU Income: Some lenders will allow you to use projected or actual ADU rental income to qualify.
Short-Term Rentals: Certain DSCR lenders use market-based rent projections (AirDNA, appraisals) rather than just long-term leases.
Zoning matters: Not all lenders accept income from ADUs or STRs — it depends on local regulations and lender guidelines.

If you’re considering adding an ADU or renting short-term, it’s critical to choose the right loan product upfront.

Key Considerations for Investors

Cash Flow vs. Appreciation: Decide whether your strategy is monthly cash flow, long-term appreciation, or both.
Reserves: Many lenders require you to have cash reserves to cover several months of mortgage payments.
Property Condition: Fixer-uppers may require renovation financing or cash.
Taxes & Write-offs: Mortgage interest, depreciation, and other expenses may be deductible (consult a CPA).
Exit Strategy: Think ahead — do you plan to refinance, sell, or hold for decades?

Is an Investment Property Loan Right For You?

Investment property financing is more specialized than primary home loans, but the opportunities can be greater, too. Whether you’re:

Buying your first rental condo
Expanding into multi-unit properties
Converting a garage into an ADU for extra income
Building a short-term rental portfolio

...there's a loan option to fit your strategy.

Loan Comparison at a Glance

Not all investment property loans are created equal. Each program has different requirements for down payment, income verification, and property use. Here’s a side-by-side look at the most common options available to investors.

📊 Investment Property Loan Comparison (swipe on mobile)
Feature	Conventional Loan	DSCR Loan	FHA / VA (House Hack)
Who Qualifies	Borrowers with strong personal income, W-2 or full tax returns	Investors — property income is what matters	Owner-occupants (live in 1 unit, rent out others)
Down Payment	20–25% minimum	20–25% typical	FHA: 3.5% / VA: 0% (must live in one unit)
Credit Score	660+ (higher is better)	Flexible; often 620+	FHA: 580+ / VA: flexible
Rates	Higher than primary homes	Higher than conventional but flexible	Competitive (primary residence rates)
Income Requirement	Full income + tax return verification	No personal income verification	Must qualify with personal income
Rental Income	Can use documented leases	Can use market rents (long- or short-term)	Rental income from other units can help qualify
Ownership	Borrower’s name only	Borrower or LLC	Borrower’s name only
Best For	Long-term buy-and-hold investors	Portfolio investors, STR owners, self-employed	First-time investors (“house hackers”)

Note: These are general guidelines. Rates, loan-to-value limits, and requirements may vary by lender, property type, and borrower profile.

Ready to Invest Smarter?

Whether you’re buying your first rental condo, adding a duplex to your portfolio, or exploring short-term rental income, the right financing makes all the difference. Every investor’s situation is unique — from income sources to property goals. That’s why we compare multiple lenders and programs, including DSCR, conventional, and non-QM options, to find the loan that fits you best.

Ready to compare investment property loan options?

Book a time, and let's have an informal discussion about your finances and goals.