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Fundamento

Financing an investment property

Investment financing differs from primary-residence financing: 20–25% down (vs. 5–20%), rate ~0.5–0.75 points higher, more scrutiny on DTI. Loan types: conventional 30-year, 15-year, ARMs, portfolio, DSCR, hard money/bridge, cash-out refi.

Conventional 30-year fixed is the most common — long fixed-rate financing protects against rate increases. 15-year fixed has a lower rate and faster amortization but worse cash flow. ARMs make sense only if you plan to sell or refinance before the fixed period ends.

Portfolio loans (lender holds the loan rather than selling to Fannie/Freddie) work for non-conforming situations. DSCR loans are underwritten on the property's cash flow rather than borrower income — useful for high-DTI borrowers and large portfolios, but at a rate premium.

Hard money / bridge: short-term, high-rate. Right for value-add or BRRRR (buy-rehab-rent-refinance). Wrong for long-term holds. Cash-out refinance: standard mechanism for pulling equity back out to fund the next purchase.

#DSCR#conventional#portfolio#hard money

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