Investment Home
A property purchased not to live in but to rent out or hold for appreciation, with stricter financing terms.
Investment property financing exists on different terms than financing for a home you'll occupy yourself. Lenders require larger down payments (typically 15%–25%), charge higher interest rates, and demand more documented reserves because the default risk on investment loans is statistically higher.
On the income side, lenders often allow a percentage of the projected rent (usually 75%) to be added to the borrower's qualifying income, which can help offset the higher payment in DTI calculations. Existing landlord experience strengthens the file.
Conventional loans through Fannie Mae and Freddie Mac dominate investment property financing, FHA and VA programs are restricted to primary residences. Some borrowers use cash-out refinances on an existing primary to fund the down payment on an investment property.
Related terms
Other terms you'll see alongside Investment Home
The home a borrower lives in as their main place of residence, qualifying for the most favorable loan terms.
A property the borrower will occupy part-time, such as a vacation home, financed at terms between primary and investment.
The portion of a home's purchase price the buyer pays out of pocket up front, with the mortgage covering the rest.
Liquid funds the borrower must have available after closing, measured in months of full PITI payment.
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