2026 Rental Property Loans
Compare 15 types of rental property loans from vetted investor-focused lenders, with current 2026 rates, qualification requirements, and lender match tools. Built for investors scaling from their first SFR to commercial portfolios.
🪄 RentalRealEstate Quick Answer
Rental property loans are mortgage products specifically used to finance the acquisition or refinance of income-producing real estate, from single-family homes to large commercial properties. With an average investment property mortgage rate of approximately 7% in 2026, understanding the full range of available loan types and their unique terms is essential for investors to secure the best financing for their strategy.
This page covers 15 types of rental property loans (including conventional, FHA, VA, commercial, HELOC, hard money, ARM, blanket, refinance, and seller financing), borrower requirements, and state-by-state lending resources.
Investment Property Mortgage Rates
What is a Good Interest Rate for a Rental Property?
Investment property mortgage rates typically run 0.5% to 1% higher than primary residence rates, with lenders currently averaging around 7% for rental property loans in 2026. Combined with down payment requirements of 15–25%, these financing terms make it essential for investors to carefully evaluate cash flow, cap rates, and long-term appreciation potential before locking in a loan on their next rental property.
7%
Average Investment Property Mortgage Rate in 2026
15-25%
Average Investment Property Down Payment in 2026
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Rental Property Lenders
Top Pick Rental Property Lender
Kiavi
Kiavi is a real estate lending platform that specializes in providing financing solutions for real estate investors. Kiavi focuses on speed and flexibility, by leveraging technology to streamline the loan process.
Rating
Lender Type
Private Lender
Loan Types
Fix & Flip, Bridge, New Construction, DSCR Rental, Portfolio
Rates
Rates as low as
6.375%2
Amounts
Loans starting at
$500,0003
Top List of Rental Property Lenders
Finding the right lender is one of the most important steps in financing a rental property, as loan terms, rates, and qualification requirements can vary significantly from one lender to the next.
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15 Different Types of Rental Property Loans
Lets take a closer look at the different types of common loan products available to investors. Each loan type offers unique terms, qualification requirements, and advantages depending on the property type, investment strategy, and borrower profile. Whether you are a first-time investor purchasing a single-family rental or an experienced landlord scaling a portfolio of commercial properties, understanding these financing options is essential for making informed investment decisions. Below is our list of the 15 most common types of loans for rental properties:
Loan Categories
Multifamily Real Estate Loans
Multifamily real estate loans are designed for real estate investors looking to purchase or refinance residential real estate assets that can range from a duplex up to hundreds of units in large apartment complexes.
Commercial Real Estate Loans
Commercial Real Estate (CRE) loans are used to finance the purchase of commercial real estate. The property can be anything from an office building to a retail storefront, and loan proceed uses can range from acquisition to new construction.
Conventional
Conventional loans for rental properties are the most common type of rental property loan. They are not insured or guaranteed by the government, and are available in a variety of terms, with the most common being 30-year and 15-year fixed-rate mortgages and also a variety of adjustable-rate mortgage (ARM) products available.
Refinance
Refinance loans are a strategic financing option for rental property investors looking to improve their loan terms or access built-up equity. The two primary types are rate-and-term refinancing, which secures a lower interest rate or better terms, and cash-out refinancing, which allows investors to tap into their property’s equity to fund additional investments or renovations.
FHA
FHA (Federal Housing Administration) loans are a popular choice for new rental real estate investors. FHA loans have lower credit score requirements and a significantly lower down payment requirement – currently just a 3.5%. FHA loans are primarily intended for owner occupied single-family homes, but can also be used for multi-family properties as long as the owner lives in one of the units.
VA
For veterans of the United States Armed Forces, using a VA loan for a rental property can be a great financing option. The VA loan is a government-backed loan program available to eligible veterans, active-duty service members, and reservists. VA loans are primarily intended to owner occupied single-family homes, but can also be used for multi-family properties as long as the owner lives in one of the units.
Seller Financing
Using seller financing to purchase a rental property can be a great way to obtain financing when otherwise unattainable. In a seller financing deal, the seller of a property agrees to essentially act as the bank, where the buyer makes payments to them directly. The seller holds the title to the property until the loan is paid back in full.
HELOC
HELOCs (Home Equity Line Of Credit) can be used in 2 different ways to fund rental property purchases. This can include using a HELOC to pull money out of your primary residence, or pulling money out of an existing investment rental property. Proceeds from a HELOC can be a great source of down payments for real estate investors to use existing idle equity for acquiring another property or even do upgrades to an existing property.
Adjustable-Rate-Mortgage (ARM)
ARM loans, an acronym for Adjustable Rate Mortgage, are a type of mortgage loan in which the interest rate is adjustable. This means that the monthly payments can go up or down over time, based on changes in the market interest rates. There are several different types of ARM loans used for investment properties, with the most common being 3/1, 5/1, 7/1, and 10/1.
Hard Money (Private Lending)
Hard money loans are high-interest and short term loans that experienced investors use to purchase and/or rehab properties. These loans are a go-to option for experienced real estate investors who need quick access to capital, to quickly purchase or rehab an opportunistic property. Interest rates on hard money loans are generally higher than traditional loans, ranging from 10% to 15%.
Small Business Association (SBA)
Small Business Administration (SBA) loans can be a good financing option for businesses looking to acquire real estate for their operations. The two primary SBA loan programs that are commonly used for real estate purchases are the SBA 7(a) and 504 loans. These programs enable businesses to purchase commercial real estate, construct new buildings, or renovate existing properties, as long as certain owner occupancy requirements are met.
DSCR (Debt Service Coverage Ratio)
Debt Service Coverage Ratio (DSCR) loans can be an excellent financing option for real estate investors looking to qualify based on a property’s rental income rather than their personal income. DSCR loans evaluate whether the property’s net operating income is sufficient to cover the mortgage debt payments, using a ratio typically of 1.0 or higher.
Bridge Loan
A bridge loan is a short-term financing option used by real estate investors to quickly acquire or reposition a property before securing long-term permanent financing. Bridge loans typically have terms ranging from 6 to 24 months with higher interest rates than conventional mortgages. These loans are commonly used in value-add strategies, BRRRR investing, and time-sensitive acquisitions where speed to close is critical.
Portfolio
A portfolio loan is a type of mortgage that the lender originates and holds on their own books rather than selling to secondary market agencies like Fannie Mae or Freddie Mac. Because portfolio lenders set their own underwriting guidelines, these loans offer greater flexibility in qualification criteria, making them ideal for investors who exceed conventional financing limits or have non-traditional income sources. Portfolio loans can be used to finance single or multiple rental properties and often accommodate unique borrower situations such as self-employment, high property counts, or complex entity ownership structures.
Blanket
A blanket loan is a type of financing that allows real estate investors to purchase multiple properties simultaneously under one loan, secured by more than one piece of collateral. This structure simplifies financing by consolidating multiple mortgages into a single loan, making repayment more manageable. Lenders secure the loan with a lien against all properties, meaning they can seize all properties if the borrower defaults. Despite this risk, blanket loans offer benefits like consolidated closing cost savings and the ability to release individual properties from the lien as they’re sold.
Mezzanine
A mezzanine loan is a type of commercial real estate financing often used in conjunction with a first mortgage loan. They bridge the gap between the senior debt and the equity contribution of the borrower, essentially serving as a layer of financing between primary loans and equity. Mezzanine loans often have high interest rates due to their subordinated position and associated risk, but they can provide an important source of flexible funding. Borrowers use mezzanine loans when primary financing is not enough to complete a project or transaction, offering potential for greater returns on equity.
Construction Loan
A construction loan is a specialized financing product used to fund the ground-up building or major renovation of a residential or commercial property. Unlike traditional mortgages, construction loans are typically disbursed in phases or “draws” as the project reaches predetermined milestones. These loans generally carry higher interest rates and require detailed project plans, contractor bids, and builder qualifications for approval. These loans are popular among build-to-rent investors developing new rental properties from the ground up. Upon project completion, borrowers typically refinance into a permanent loan for long-term financing.
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Rental Property Loan FAQ
What is a Rental Property Mortgage?
A mortgage is a type of loan that is secured by property or real estate. Investors lend the required capital for an investor to purchase the property, and in exchange receive the legal promise for the investor to pay back the original principal capital as well as interest within an agreed upon time frame. Mortgages are legally binding real estate agreements that provide the lender the right to have legal claim against the borrower’s property should they default on the terms of the note.
How Do Rental Property Mortgages Work?
Using mortgage loans for investment rental properties, allows investors to take advantage of the power of financial-leverage through rental real estate to generate significant profits when done correctly. A mortgage typically works by using the subject property (or other assets) as collateral for a loan. If the borrower defaults on the loan, the lender can foreclose on the property/collateral and recoup their losses. These loans can be used to finance the purchase of virtually any type of rental properties such as commercial and residential properties. Loan terms for rental property mortgages can range anywhere from 1 to 30 years depending on the property type. The interest rate on a rental property mortgage is typically higher than a traditional mortgage because the lender is taking on a higher level of risk. To offset that risk, larger down payments are usually required – 20% to 40% for a rental property.
What Type of Loan is Best for a Rental Property?
Choosing the best type of loan for a rental property depends on the specific nature of the property, its intended use, and the investor’s financial situation. Traditional mortgages can be ideal for Single Family Rentals (SFR) and smaller multifamily properties. Larger multifamily properties, commercial entities, and specialized facilities often require commercial loans or specialized financing options. Bridge loans, hard money loans, or government-backed loans might also be suitable based on the project’s urgency, size, or niche. Always consider interest rates, loan terms, and lender flexibility when making a decision.
| Property Type | Loan Types |
|---|---|
| Single Family Rentals (SFR) | Traditional mortgages, VA loans (for veterans), FHA loans, hard money loans, investment property loans |
| Multifamily (1-4 Units) | Traditional mortgages, FHA loans, bridge loans, hard money loans, investment property loans |
| Multifamily (5+ Units) | Commercial real estate loans, multifamily financing, bridge loans, hard money loans |
| Vacation Rentals | Investment property loans, portfolio loans, hard money loans |
| Hospitality Properties | Commercial real estate loans, SBA loans (for small businesses), bridge loans |
| Land | Land loans, hard money loans, construction loans, commercial loans |
| Parking Lots | Commercial real estate loans, hard money loans |
| Self Storage | Commercial real estate loans, SBA loans, hard money loans |
| Senior Living Facilities | Commercial real estate loans, HUD/FHA loans (specifically for healthcare-related real estate) |
| Student Housing | Commercial real estate loans, bridge loans, hard money loans |
| Other Types | Depending on the nature of the property: commercial loans, hard money loans, investment property loans, etc. |
Pros and Cons of a Rental Property Loan
Mortgages can be a great way to use the power of financial leverage to your benefit. This financial scheme however also comes with risks. Since there are several different ways to finance a rental property with a mortgage loan, we take a look at each type with its own set of pros and cons:
Pros
- Potential for passive income: A rental property can generate a steady stream of income, which can help cover the mortgage payments and potentially provide additional income. This can be an effective way to build wealth over time, as property values tend to appreciate.
- Tax benefits: Rental property owners can often benefit from tax deductions, such as mortgage interest, property taxes, insurance, and depreciation. These deductions can help reduce the overall tax burden, making the investment more financially attractive.
- Leverage and appreciation: By taking out a mortgage, you are using leverage to buy a more valuable property than you could afford outright. As the property appreciates in value, your equity increases, potentially providing significant returns on your initial investment.
Cons
- Financial risks: Rental properties come with risks, such as vacancies, unexpected maintenance costs, or a drop in property values. These risks can make it difficult to meet your mortgage obligations, potentially leading to financial stress or even foreclosure.
- Increased liability: As a landlord, you are responsible for maintaining the property and ensuring the safety of your tenants. This may expose you to potential lawsuits and other liabilities, which can be costly and time-consuming.
- Reduced liquidity: When you invest in a rental property, your money is tied up in an illiquid asset. If you need access to cash quickly, selling a property can be a lengthy and potentially costly process. This reduced liquidity can make it difficult to respond to financial emergencies or take advantage of other investment opportunities.
Rental Property Loans vs Primary Residence Home Loans
Although rental property loans and primary residence loans are both real estate backed mortgages, there are several differences between them, with the most obvious being the intention of the loan: primary residence vs business generating rental income. Below are some additional differences between the two types of loans:
| Rental Property Loans | Primary Residence Home Loans | |
|---|---|---|
| Loan Purpose | Financing properties for rental income | Financing the borrower’s primary residence |
| Loan Terms | Typically shorter terms (e.g., 15-30 years) | Typically longer terms (e.g., 30 years) |
| Interest Rates | Slightly higher interest rates | Typically lower interest rates |
| Down Payment | Higher down payment requirements | Lower down payment requirements |
| Loan-to-Value Ratio | Lower loan-to-value ratio (e.g., 75-80%) | Higher loan-to-value ratio (e.g., 80-97%) |
| Rental Income | Considered as part of the qualification | Generally not considered |
| Tax Implications | Many tax advantages | Limited tax benefits |
| Documentation | May require additional income verification | Standard income verification |
| Occupancy Requirement | No occupancy requirement (depending on loan type) | Must occupy as primary residence |
| Financing Restrictions | May have restrictions on number of properties | No restrictions on number of properties |
What is the Difference Between Debt and Equity?
In the wide world of real estate finance, financing a rental property can be broken down into two components: Debt and Equity. So, what’s the difference between the two? Debt investments, also known as mortgages, are loans that are used to finance the purchase of a property. The investor agrees to make payments on the loan over a set period of time, and once the loan is paid off, they own the property outright.
Debt
With debt investing, you’re lending money to a borrower (usually a real estate developer) and receiving interest payments on that loan. The loan is secured by the property itself, so if the borrower defaults, you could pursue ownership of the property. Debt investing is generally a more predictable and less risky investment than equity investing, but the returns are typically lower as well.
Equity
With equity real estate investing, you’re essentially buying a piece of property and becoming a partial owner. You’ll share in the profits (or losses) generated by the property, but you’ll also have a say in how it’s managed. Equity investing can be a great way to build wealth over time, but it’s important to remember that it’s also a more volatile investment than debt investing.
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About the Author
Ryan Nelson
I’m an investor, real estate developer, and property manager with hands-on experience in all types of real estate from single family homes up to hundreds of thousands of square feet of commercial real estate. RentalRealEstate is my mission to create the ultimate real estate investor platform for expert resources, reviews and tools. Learn more about my story.
Last Updated: April 2026
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