Understanding Investment Property Financing
Learn about the various financing options available for real estate investors. We'll help you understand which loan types might fit your plans, and we can introduce you to local lenders who work with investors.
EDP Realty is not a lender. Loan terms are set by the lender and depend on your situation.
Common Investment Property Financing Options
Explore the different types of loans available to real estate investors and learn which might be right for your strategy
Hard Money LoansShort-Term
Short-term, asset-based loans often used for fix-and-flips and purchases that need to close quickly. Hard money lenders focus mainly on the property, and rates are usually higher than conventional loans.
- • Common for fix-and-flip projects
- • Based mainly on the property
- • Short loan terms
- • Often interest-only payments
DSCR LoansRental Income
Debt Service Coverage Ratio loans look mainly at whether the property's rent covers the loan payment, rather than your personal income. Often used for buy-and-hold rentals.
- • Focus on the property's rental income
- • Used for buy-and-hold rentals
- • Longer-term financing
- • Can be used across multiple rentals
Bank Statement Loans
Designed for self-employed borrowers and business owners. The lender reviews bank statements in place of traditional tax returns and W-2s.
- • Bank statements instead of tax returns
- • Built for self-employed borrowers
- • Primary and investment properties
Fix & Flip Loans
Financing for buying and renovating a property to resell. Many include renovation funds that are released in draws as the work is completed.
- • Purchase and renovation funds
- • Draws released as work is done
- • Short loan terms
Portfolio Loans
Blanket or portfolio financing that covers several properties under one loan. Often used by investors who own multiple rentals.
- • Multiple properties, one loan
- • Often held by the lender, not resold
- • May use cross-collateralization
Bridge Loans
Short-term financing that covers the gap between buying a property and getting long-term financing or selling it.
- • Temporary financing
- • Usually refinanced or paid off at sale
- • Useful during a transition
Compare Financing Options
A quick look at how these loan types differ
| Loan Type | What the Lender Looks At | Commonly Used For |
|---|---|---|
| Hard Money | Mostly the property | Fix and flip, quick purchases |
| Fix & Flip | Property and renovation plan | Buy, renovate, resell |
| DSCR | Property rental income | Buy and hold rentals |
| Bank Statement | Bank deposits | Self-employed borrowers |
| Portfolio | Experience and holdings | Several properties at once |
| Bridge | Property and exit plan | Short-term transitions |
EDP Realty is not a lender. Loan terms are set by the lender and depend on your situation.
What Lenders Typically Look At
Credit History
Most lenders check credit. What they require depends on the lender and the loan type.
Down Payment
Investment loans usually require money down. How much is up to the lender and the loan.
Cash Reserves
Many lenders want to see cash left over after closing to cover payments and repairs
Property Appraisal
Lenders usually order an appraisal to confirm the property's value
How We Can Help
Lender Introductions
We can introduce you to local lenders who work with investors. You choose who you work with.
Educational Resources
Learn about different loan products to make informed decisions
Talk It Through With an Agent
Our agents can talk through how financing fits the property you're looking at
No Obligation
Asking for an introduction doesn't commit you to anything
Ready to Explore Your Financing Options?
Tell us what you're planning to buy, and we can introduce you to local lenders who work with investors. EDP Realty is not a lender. Loan terms are set by the lender and depend on your situation.