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Financing Your Investment: Understanding Investment Property Rates

December 27, 2025

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If you’re planning to buy an income-generating property, shopping around to find the best mortgage rates can help you make the most of your investment. Check out today’s investment property mortgage rates and learn how these types of rates are determined. Current investment property mortgage rates In December, 30-year mortgage rates averaged 6.42%, according to Zillow data. This is down 14 basis points from the previous month. But rates have ticked up recently and have been hovering in the high 6% range this month. Most major forecasts expect mortgage rates to go down this year, but this hinges on inflation continuing to go down. As you explore rates, keep in mind that investment property mortgage rates are generally higher than mortgage rates on primary residences or second homes . See how investment property mortgage rates compare Check out today’s mortgage rates to see how rates are trending. These rates are for all mortgages, not just investment property mortgages.

Mortgage type

Average rate today

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Investment property definition When using a mortgage to buy a property, buyers can choose from three types of occupancy: primary residence, second home, and investment property. Your primary residence is your home, and the place where you live for the majority of the year. A second home is a home you occupy only some of the time, such as a vacation home. Investment properties are properties purchased solely for the purpose of generating income, often by renting them out on a short- or long-term basis. Investment properties are not owner-occupied, meaning the owner doesn’t live in the home. Key differences from owner-occupied mortgages Here’s what you can expect when getting an investment property mortgage: Higher interest rates: Because these mortgages are considered riskier by lenders, you’ll pay more in interest to get one. Larger down payment requirements : Expect to have to put down between 15% to 25% at a minimum, depending on the type of property. Stricter qualification standards: Lenders may require higher credit scores for investment property loans. And if you have loans on other properties, you may have a harder time keeping your debt-to-income ratio acceptably low. Factoring in rental income: If you’re buying a home to be rented out, you may be able to use a portion of the income generated by that unit to help you qualify for the mortgage. Overall, investment property mortgages are typically more expensive and harder to qualify for than mortgages for borrowers who are buying a property they intend to live in since they’re considered riskier loans. Why are investment property mortgages riskier? If the borrower encounters a financial hardship, they’re more likely to make sure the costs on their primary residence are paid first. Investment properties also require a lot of work and money to maintain. If the owner has a hard time finding tenants or ends up putting more money into their investment than they’re getting out of it, they could decide to walk away. Factors influencing your investment property mortgage rate Property type Details of the property you’re purchasing can have an impact on your rate. For example, if you’re buying a multi-unit building rather than a single residence, you may be charged a higher interest rate. Location Some states have higher average rates than others. See how mortgage rates trend in your state to get a better idea of what you could pay. Down payment amount Putting more down than the minimum requirement can help lower your mortgage rate. “A homebuyer looking to purchase an investment property should account for a 20% to 25% down payment to get a competitive rate,” says Raul Hernandez, a mortgage broker with Competitive Home Lending . Loan term Shorter loan terms have lower rates compared to longer terms. For example, you’ll pay less on a 15-year mortgage than a 30-year mortgage. Your financial profile The better your overall financial profile, the better the rate you’ll likely get. To help keep your rate as low as possible, you could work on boosting your credit score, improving your DTI, and saving for a larger down payment. Hernandez says its possible to qualify for an investment property mortgage with a credit score as low as 620. But those with lower scores will need to make a larger down payment and pay more in interest, he says. Where to find investment property lenders Many local and nationwide mortgage lenders will lend to investment property buyers and owners. For example, Chase offers investment property mortgages. If there’s a lender you’re interested in, give them a call or look on their website to see if they have these types of loans. If you’re looking for an investment property loan lender with more flexible requirements, you might want to explore non-QM loan lenders. Local banks and credit unions are often a good choice if you want more personalized help, since they’re smaller. They may also be able to offer better rates, but be sure to shop around. If you don’t want to do the shopping around yourself, you can enlist the services of a mortgage broker . Brokers will help you compare multiple lenders at once so you can easily shop rates and find the right loan for your needs. Investment property mortgage FAQs

What are today’s investment property mortgage rates?