An investment property mortgage is a loan used to purchase real estate intended to generate income—typically through rent, appreciation, or both. These properties are not owner-occupied and may include:

• Single-family homes

• Condominiums or townhomes

• Multi-family properties (up to four units for residential loans)

• Short-term or vacation rentals

Because these properties pose higher risk to lenders, investment mortgages often come with stricter requirements and higher costs than loans for primary residences.

Lenders view investment properties as higher-risk loans because:

• They’re not owner-occupied

• Borrowers are more likely to default on an investment property than their own home during financial hardship

Several financing options exist depending on the type of property and your investment goals:

1. Conventional Loans
2. Portfolio Loans
3. Hard Money Loans
4. Commercial Loans
5. Home Equity Loans or HELOCs

Lenders often allow a portion of expected rental income to be included in your income for qualification purposes. This typically requires:

• A signed lease agreement

• Rent schedule (Form 1007)

• Two years of rental history (if applicable)

However, most lenders apply a discount (typically 25%) to account for vacancies, maintenance, and non-payment.