Investment Property Mortgage Rates | December 2025

How much higher are current investment property interest rates?

As a general rule, investment property mortgage rates will typically be at least 0.50% to 0.75% higher than primary mortgage rates.

Lenders consider investment properties to be riskier than owner-occupied homes, given that borrowers are more likely to default on investment property loans. Keep in mind that these are general guidelines, and rates can vary significantly from lender to lender and from borrower to borrower.

Still, despite higher rates, investing in real estate is often a good long-term idea. Here’s how much you can expect to pay now to finance that future cash flow.

In this article (Skip to...)

• Current interest rates
• Investment property rates
• What affects rates?
• How to get a lower rate
• Investment property loans
• FAQ

Current investment property mortgage rates for December 24, 2024

Investment property interest rates are usually at least 0.5% to 0.75% higher than standard rates.

At today’s average rate of % (% APR) for a primary residence, buyers can expect interest rates to start around % to % (% - % APR) for a single-unit investment property.

Rates are provided by our partner network and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.

Note that today’s average investment property interest rates are based on a prime borrower profile with a credit score of 740 and a 40% down payment. If you have lower credit or a smaller down payment, your interest rate will likely be higher than what you see advertised.

That’s why average rates should only be used as a benchmark. Your investment property rate will differ, so be sure to compare quotes from a few lenders and find the best deal for you.

What are investment property mortgage rates?

An investment property mortgage rate is the interest rate on a loan intended to buy or refinance an investment property, which is one that the borrower does not intend to use as their primary residence.

Most of the time, these properties are bought to generate rental income or to increase in value over time. Single-family homes, duplexes, triplexes, and apartment buildings rented out to tenants are examples of investment properties.

Investment property mortgage rates are usually higher than mortgage rates for primary residences because lenders consider them riskier loans.

How much higher are investment property mortgage rates?

Investment property mortgage rates will always be higher than those for primary residences. But how much higher?

The exact answer to that question depends on the type of investment property, your creditworthiness, and your down payment. But as a rule of thumb, you can expect the interest rate on your investment property to be at least 0.50% to 0.75% higher than the rate on your primary mortgage.

As a rule of thumb, you can expect investment loan rates to be at least 0.50% to 0.75% higher than the rate on your primary mortgage.

For example, today’s live 30-year fixed rate as of December 24, 2024 is % (% APR), so the investment property mortgage rate would be around % to % (% - % APR).

Lenders add this surcharge because they consider rental and investment property mortgages to be higher-risk. If times are tight, mortgage borrowers are more likely to default on rental properties than on their primary property.

Furthermore, economic hardships also affect a renter’s ability to make monthly payments. So these types of home loans are more likely to default during hard economic times.

To compensate for the additional risk, lenders charge higher investment property mortgage rates and impose stricter borrower qualification requirements. That makes it extra important to shop around to ensure you get a fair mortgage rate on your investment property before buying.

How lenders set investment property interest rates

Behind the scenes, the rate you pay isn’t totally up to your mortgage lender. Banks frequently adjust their investment property mortgage rates in accordance with Fannie Mae and Freddie Mac guidelines.

Fannie and Freddie set the guidelines for most mortgages today, and the fees they charge directly affect the final interest rate you pay. Because of the increased risk of purchasing or refinancing investment properties, Fannie and Freddie charge higher fees on those transactions. Their fees trickle down to you as a higher interest rate.

*Rates shown here are an example set meant for comparison only. Your own rates will vary. 

For a 25% down payment, an investment property loan typically includes fees equal to 6.375% of the loan amount (e.g., $6,375 for every $100,000 borrowed). Most borrowers opt for a higher interest rate instead of paying these fees upfront, which usually adds 0.5% to 0.75% to the rate.

For duplexes, expect an additional 1.0% in fees or a 0.125% to 0.250% rate increase.”To get the best rates, you will want to put at least 25% down. The ideal loan-to-value ratio for investment purchases is 75% or less,” advises Jon Meyer, loan expert and licensed MLO.

Other factors that impact investment property mortgage rates

Fannie Mae and Freddie Mac guidelines aren’t the only factors influencing investment property mortgage rates today. Your personal finances and the current market rate play a significant role too.

• Credit score: A higher credit score can secure better investment mortgage rates. The minimum credit score for rental properties is often higher than for a primary residence or first-time home buyer.
• Debt-to-income ratio (DTI): A lower DTI improves your chances of securing favorable investment property loan rates during the underwriting process.
• Down payment requirements: Larger down payment requirements (15%-25%) can reduce investment property interest rates. Smaller down payments may lead to higher non owner occupied mortgage rates.
• Loan-to-value ratio (LTV): A lower LTV indicates less risk, improving your chances for better investment property mortgage rates.
• Cash reserves: Lenders require several months of mortgage payments in cash reserves to cover vacancies, especially for rental properties or vacation homes.
• Experience as a landlord: Having property management experience or hiring a manager positively influences loan approval and investment home loan rates.
• Number of mortgaged properties: Conventional mortgages limit the number of financed properties you can hold, and lenders may require your tax returns during the approval process.

It’s hard to escape high interest rates for investment properties. But there are ways to make sure you get the best deal possible.

How to get the lowest investment property mortgage rates

It’s hard to escape high interest rates for investment properties. But there are ways to make sure you get the best deal possible.

• Make a bigger down payment: A larger down payment can reduce investment property mortgage rates, especially if you put down at least 20%, which can lower overall costs.
• Improve your credit score: Higher credit scores lead to better investment mortgage rates, lowering monthly payments, and increasing cash flow from rental properties.
• Reduce your existing debt: Lowering your debt-to-income ratio helps show lenders that you can manage monthly mortgage payments. Pay down credit cards and other debt to improve your chances of getting a low interest rate on an investment property.
• Shop around: Compare offers from different lenders, including credit unions, to find the best investment property interest rates and potentially save thousands over the life of the loan.
• Negotiate mortgage interest rates: Remember, investment home loan rates aren’t fixed. Use quotes from various lenders to negotiate lower rates and better terms.

By following these steps, you can improve your chances of securing favorable investment mortgage rates and maximize your long-term returns. Remember, non owner occupied mortgage rates tend to be higher, so taking the time to negotiate and shop around can significantly benefit your investment strategy.

How to get an investment property mortgage loan

Securing a loan with low rental property interest rates can be easier than you think. Follow this step-by-step guide to understand the qualifying process and how current mortgage rates for investment property may affect your borrowing costs.

1. Determine your investment goals. Understand what you want from your investment property. Are you looking for a long-term rental, a fix-and-flip, or something else? This will help shape the type of loan you’ll need.
2. Check your credit score. Lenders will look closely at your credit score. Make sure it’s in good shape, and if needed, take some time to improve it. The better your credit, the more favorable your loan terms will be.
3. Assess your financial situation. You’ll likely need a higher down payment for an investment property, often around 20–25%. Ensure you have the funds and ability to meet your monthly mortgage payments.
4. Shop around for lenders. Speak with multiple lenders to understand the types of loan programs available. Explain your investment plans and ask for their best rates and terms. Don’t hesitate to negotiate.
5. Get pre-approved. A pre-approval letter gives you credibility as a buyer and helps you understand how much you can borrow. It will make the process smoother once you find the right property.
6. Find the property. Work with a real estate agent experienced in investment properties. They can guide you to suitable options that align with your investment goals. Once you find the right property, make an offer and formally apply for the mortgage. Provide all required documents promptly, and stay in close communication with your lender.

Remember, investing in property is both an exciting and serious financial decision. Stay diligent, do your homework, and that investment property will soon be yours!

Types of investment property mortgage loans

When buying a rental property, you’ll have access to many of the same financing options as you would for a primary residence or a second home mortgage loan. However, investors have several alternative lending options to consider.

Each lender will provide different investment property mortgage rates, so compare various offers to ensure you obtain the best deal available.

• Conventional loans: A conforming loan for investment properties requires a minimum down payment of 15%, with 20% recommended to avoid mortgage insurance and get better terms.
• Government-backed loans: FHA, USDA, and VA loans are available for 2-4 unit multifamily properties if you live in one. Down payments start at 3.5% (FHA) and 0% (VA).
• Portfolio loans: Portfolio lenders set their own terms, offering flexibility on down payments and property limits, but usually at higher interest rates than traditional loans.
• Non-warrantable condo loans: For condos that don’t meet conventional standards, these loans help finance the property but typically have higher interest rates and stricter qualification requirements.
• Hard-money loans: Private lenders offer short-term loans with high interest rates and fees, ideal for quick financing on real estate investments.
• Commercial loans: Designed for property purchases with more than four units or based on rental income alone, these loans are expensive and complex to arrange.
• DSCR loans: These loans assess your debt service coverage ratio (DSCR) to ensure rental income can cover the property’s debt, with a ratio of 1 or higher preferred.
• Home equity financing: Use a HELOC, home equity loan, or cash-out refinance to leverage home equity for purchasing investment properties or covering expenses.

Pros and cons of investment property mortgage loans

Compared to mortgages for primary residences, investment property loans have their own set of advantages and disadvantages. Here is a list of some of the main benefits and drawbacks.

Pros of investment property mortgage loans

• Generate rental income: You can borrow to buy a rental property and use rental income from tenants to cover mortgage payments while building wealth through property appreciation.
• Higher loan limits: Real estate investors can borrow more than with conventional loans. Jumbo loans often exceed $1 million, allowing for the purchase of high-end properties with significant rental income potential.
• No primary residence requirement: Unlike government-backed loans, investment property loans don’t require you to live in the property, giving investors more flexibility.

Cons of investment property mortgage loans

• Higher interest rates: Rental property mortgage rates are higher than those for primary residences. With higher investment home loan rates, you’ll need more rental income to cover larger mortgage payments.
• Larger down payment: Lenders usually require a larger down payment, making it harder for investors to secure financing and enter the real estate market.
  Stricter requirements: Lenders impose tougher criteria, including higher credit score requirements and lower debt-to-income (DTI) ratios, making it harder for some investors to qualify.

Investment property loans vs. conventional loans

Investment property loans generally come with higher mortgage interest rates than conventional loans for primary residences due to the increased risk for lenders.

Borrowers typically face stricter requirements, including a larger down payment and higher credit score standards.

Additionally, mortgage rates on investment property often include added fees or rate hikes to account for the risk of vacancies. In contrast, conventional loans offer lower rates and more lenient terms, particularly for first-time home buyers or owner-occupied properties.

FAQ: Investment property mortgage rates

What are today’s rental property loan rates?

Mortgage rates for investment properties are higher than those for primary residences because lenders view them as higher-risk.

Still, rental properties are usually a sound investment in the long run, and a slightly higher rate might not matter much when compared to the returns you’ll see on the property. Plus, every applicant is different. The best way to get your current investment property mortgage rate is to get quotes from multiple lenders and make them compete. Rates change all the time, so contacting lenders online is the quickest way to get a fistful of rates to compare.