At a glance
- Best for rentals
- DSCR loan
- Best for flips
- Fix-and-flip or bridge loan
- Best for new builds
- Construction loans
- Owner-occupied property
- SBA 504 or 7(a) loan
- Typical down payment
- Often 20% to 25% for rentals
- Credit
- 650+ on most programs; 500+ for revenue-based financing; 700+ for SBA loans
Real estate investing runs on leverage. The right loan lets you buy more property with less of your own cash, move quickly on a good deal, and refinance into long-term financing once a property is stabilized. The wrong loan can eat your profit in interest or leave you stuck when a short-term note comes due.
This guide explains the main types of real estate investor loans, which one fits each strategy, how lenders evaluate investors, and the questions investors ask us most.
At NexGen Lending, we help investors and business owners nationwide explore real estate funding: HELOCs, cash-out refinances and loans secured by property they already own.
Why Investor Financing Is Different
- The property matters as much as you do. Lenders focus on the deal: purchase price, rehab budget, after-repair value (ARV) and rental income.
- Speed wins deals. Competitive properties often go to buyers who can close in days, not months.
- Personal income documents may not be required. Many investor loans qualify based on the property’s cash flow instead of your tax returns.
- Business-purpose lending. Investment property loans are made to investors for business purposes, typically through an LLC, and work differently from loans for a home you live in.
The Main Types of Real Estate Investor Loans
| Loan type | Best for | Typical term | Qualifies mainly on |
|---|---|---|---|
| DSCR loan | Buy-and-hold rentals | Long term, often 30 years | The property’s rental income vs. its payment |
| Fix-and-flip loan | Buying, renovating and reselling | Short term, often 6 to 24 months | Purchase price, rehab budget, ARV and experience |
| Bridge loan | Moving fast, or holding a property until it’s stabilized or refinanced | Short term | The property’s value and your exit plan |
| Ground-up construction loan | Building new properties | Through construction, then refinance or sale | Plans, budget, builder and your experience |
| Commercial real estate loan | Multifamily (5+ units), mixed-use, retail and office | Medium to long term | Property income and borrower strength |
| SBA 504 or 7(a) loan | Business owners buying property their own business will occupy | Up to 25 years | Business cash flow |
DSCR loans for rental properties
A debt service coverage ratio (DSCR) loan qualifies you based on whether the property’s rent covers its mortgage payment, taxes, insurance and HOA dues. A DSCR of 1.25 means the property earns 25% more than its payment. Many lenders look for a ratio of 1.0 to 1.25 or higher. Because they don’t rely on your personal income, DSCR loans are popular with self-employed investors and those growing large portfolios.
Fix-and-flip and bridge loans
These short-term loans fund the purchase and often the renovation of a property. Lenders typically lend a percentage of the purchase price and rehab cost, capped at a percentage of the after-repair value. Rehab money is usually released in draws as work is completed. Rates are higher than long-term loans, so the goal is to finish, sell or refinance quickly.
Construction and development loans
Ground-up projects need a lender comfortable with construction risk. Expect to provide plans, permits, a detailed budget, a timeline and information on your builder. Funds are released on a draw schedule as stages are completed.
SBA loans for owner-occupied property
If your business will occupy at least 51% of an existing building, SBA 504 and 7(a) loans offer long terms and low down payments. They’re not for pure investment properties, but they’re a great fit for business owners who want to own their space. Our guide to buying versus leasing commercial space goes deeper.
How to Get the Best Investor Financing
- Run the numbers before you call. Know the purchase price, rehab budget, ARV and expected rent. Lenders take investors seriously when the numbers are ready.
- Have a clear exit. For short-term loans, explain how you’ll repay: a sale, a refinance into a DSCR loan, or both.
- Buy through an LLC. Most investor lenders lend to business entities. Set one up with your attorney before you’re under contract.
- Show your track record. A list of past deals, with purchase price, rehab cost and sale price or rent, can earn better terms and higher leverage.
- Keep reserves. Lenders often require several months of payments in reserve. Cushion also protects you if a rehab runs long.
- Build a reliable team. Lenders like experienced contractors, property managers and title companies.
- Compare total cost. Look at the rate, points, fees, prepayment penalties and extension costs, not just the headline rate.
What Lenders Look for in an Investor
- Credit score (many investor programs start in the 620 to 680 range)
- Experience, measured in completed flips or properties owned
- Liquidity and reserves
- The property’s value, condition and location
- Rental income or market rent for DSCR loans
- Rehab budget and scope of work
- Entity documents for your LLC
Common Questions Real Estate Investors Ask
What is a DSCR loan and how do I qualify?
It’s a rental property loan based on the property’s income rather than your personal income. You generally need a property whose rent covers its payment, a down payment (often 20% to 25%), reserves and a credit score that meets the lender’s minimum.
Can a first-time investor get a fix-and-flip loan?
Yes, though you may get lower leverage or a higher rate than experienced investors. Partnering with an experienced contractor or investor can help.
How much down payment do I need for an investment property?
It varies by loan type. Long-term rental loans often require 20% to 25% down. Fix-and-flip lenders may finance a large share of the purchase and most of the rehab, but you’ll still need cash for closing costs, reserves and any gap.
Can I use an SBA loan to buy a rental property?
No. SBA loans are for owner-occupied commercial property, meaning your operating business uses at least 51% of an existing building. Pure investment property needs a different loan.
What is the BRRRR strategy?
Buy, Rehab, Rent, Refinance, Repeat. Investors buy with short-term financing, renovate, rent the property, then refinance into a long-term loan (often a DSCR loan) to pull out cash for the next deal.
How fast can investor loans close?
Bridge and fix-and-flip loans can often close in a few weeks or less when the property and paperwork are ready. Long-term and SBA loans usually take longer.
Explore Investor Financing with NexGen
- Real estate funding to unlock equity through HELOCs, cash-out refinances and property-secured loans
- SBA loans for business owners buying their own space
- One application to compare options
- Nationwide service, from our office in Hoboken, New Jersey
This article is for general informational purposes only and is not financial, legal, tax, or investment advice. It describes business-purpose loans for investment and commercial property, not consumer mortgages. SBA figures come from the U.S. Small Business Administration as of October 2026. Loan terms, rates, and eligibility vary by lender and program and are subject to approval. Availability varies by state.