Compare Investment Property Rates Today

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Written by

Andrew Dehan

Edited by

Suzanne De Vita

Edited by

Suzanne De Vita

On Tuesday, December 26, 2023, the national average 30-year fixed mortgage APR is 7.02%, according to Bankrate's latest survey of the nation's largest mortgage... lenders. Use Bankrate's rate table to compare today's investment property APRs.

How to compare mortgage offers

Comparison-shopping for a mortgage isn’t just smart — it’s crucial to get the most competitive rate and mortgage terms. Even a 0.1 difference in an interest rate can save thousands of dollars over the life of the loan. Bankrate’s mortgage rate table allows you to easily compare personalized rates from our marketplace of trusted lenders. Here is how to compare mortgage offers on Bankrate in 3 easy steps:

Determine the right type of mortgage: There are a lot of options in home loans, so it’s important to research and decide what type of mortgage might be best for you, given your finances and your short- and long-term goals. 
Gather necessary documentation: In order for lenders to give you the most accurate quote, you will need to provide paperwork once connected with a lender that verifies your income, assets, debts and employment. 
Compare mortgage offers online: Bankrate helps you easily compare mortgage offers by using our mortgage rate table below. Our rate table filters allow you to plug in general information about your finances and location to receive tailored offers. As you weigh offers, be sure to consider APRs, lender fees and closing costs to ensure you’re making accurate comparisons — and maximizing your savings potential.

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On This Page

Today’s mortgage rates for investment properties
Investment property loans vs. conventional loans
How to get an investment property mortgage
Compare mortgage lenders side by side
Types of investment property mortgage loans
Pros and cons of investment property mortgages
Investment property FAQs

Today’s mortgage rates for investment properties

Mortgage rates on investment properties are higher than rates for primary residences, generally a percentage point higher compared to conventional loan rates for the latter. For example, if the current market rate for a 30-year fixed-rate mortgage on a primary residence is around 7 percent, the rate for an investment property might be 8 percent.

These rates are subject to change, however, and vary widely based on both overall market conditions and factors like the borrower's credit score, the loan-to-value (LTV) ratio, the loan amount and the property's location and type.

Lenders view investment properties as risky compared to primary residences. If you plan to rely on the rental income from a tenant to contribute to (or cover) the mortgage payments for the investment property, there’s a greater possibility you could default on the loan if your tenant fails to pay rent.

There’s also the reality that the U.S. mortgage system is set up to encourage primary homeownership through government-sponsored and government-backed loans. Fannie Mae, Freddie Mac, the Federal Housing Administration and the U.S. Department of Veterans Affairs all focus their lending efforts on primary homeowners.

Investment property loans vs. conventional loans

When comparing investment property loans and conventional loans, you’re often really comparing two types of conventional loans: one for an investment property and one for a primary residence.

The majority of mortgage lenders offer an investment property loan product that’s simply a conventional loan — in other words, not government-backed — but with stricter borrower qualifying requirements. An investment property loan lender might require a down payment of at least 15 percent, for example, while a conventional loan for a primary residence usually only requires 3 percent down.

Here are key points to know:

Conventional investment property loans	Conventional primary residence loans
Not offered by every mortgage lender	Offered by virtually all mortgage lenders
Often have higher interest rates, but also no restrictions on loan amount	Lower conforming loan limits, plus jumbo (non-conforming) options
Stricter credit, debt-to-income (DTI) ratio and down payment requirements	Standardized credit, down payment and DTI ratio requirements with most mortgage lenders
For one- to four-unit properties	For one-unit properties or owner-occupied multifamily properties
Possible to deduct mortgage interest (within IRS guidelines), plus rental expenses	Possible to deduct mortgage interest (within IRS guidelines)

How to get an investment property mortgage

Here are some tips to get an investment property loan at the best possible rate:

Get your credit and down payment in order: Well in advance of applying for an investment property loan, take steps to improve your credit score or maintain an already-strong score and organize the funds for a down payment and closing costs. In general, lenders give the best rates to borrowers with a credit score of 740 or higher and a higher down payment than the lender’s minimum requirement.
Take stock of debt: Now’s the time to pay down or pay off debt and understand your debt-to-income (DTI) ratio, which impacts the interest rate on your loan. If you own more than one property, your lender will want to know about any mortgages on it. Ditto for debt like a car loan or student loan. If you plan to buy the investment property through an LLC, your lender might want to see paperwork tied to the business, too.
Compare rate quotes and get preapproved: When you’re ready to look for properties, get rate quotes from at least three mortgage lenders. These might include a community bank, credit union or a lender you’ve done business with previously. A mortgage broker can also help you find the right loan. (Make sure the lender or broker is licensed to operate where you plan to buy.) Consider the APR, or annual percentage rate, which reflects the interest rate and any lender fees and points. Once you settle on a lender, get a preapproval.

Lender compare

Compare mortgage lenders side by side

Mortgage rates and fees can vary widely across lenders. To help you find the right one for your needs, use this tool to compare lenders based on a variety of factors. Bankrate has reviewed and partners with these lenders, and the two lenders shown first have the highest combined Bankrate Score and customer ratings. You can use the drop downs to explore beyond these lenders and find the best option for you.

Lender

Types of investment property mortgage loans

Conventional loans: These widely-available mortgages are offered by banks, credit unions and other lenders, who typically resell them to Fannie Mae or Freddie Mac.
Portfolio loans: Some lenders offer portfolio loans, which are not sold to secondary market investors but instead held in the lender’s portfolio.
DSCR loans: A type of non-QM loan, debt-service coverage ratio (DSCR) loans are underwritten based on the income generated by the investment property.
Non-warrantable condo loans: If the investment property is a condo, your best option could be this type of specialty mortgage.
Hard money loans: These are short-term, higher-interest loans provided by private lenders or investors.

Pros and cons of investment property mortgages

Pros of investment property loans

You can borrow more compared to a conventional conforming loan. Investment property mortgages don’t have set loan limits, unlike conforming loans.
You don’t have to live in the property. Unlike a loan for a primary residence, you don’t have to live in the property to get an investment property loan.
You can deduct mortgage interest. If you itemize your tax return, you can deduct mortgage interest, as well as other rental expenses.

Cons of investment property loans

You’ll have a higher interest rate compared to a loan for a primary residence. Investment property mortgages are riskier for lenders. Added risk translates to higher interest rates.
You’ll need to meet stricter underwriting requirements. When compared to a mortgage for a primary residence, investment property mortgages often require more cash reserves, a better credit score and a higher down payment.

Investment property FAQ

Mortgage rates in other states

I'm an enthusiast with in-depth knowledge of mortgages and investment properties. To demonstrate my expertise, let's break down the concepts and information presented in the article you provided:

Today's Mortgage Rates for Investment Properties: The article starts by discussing the current national average 30-year fixed mortgage APR, which is 7.02% on December 26, 2023. This rate is higher than typical rates for primary residences and can vary based on multiple factors such as market conditions, credit score, loan-to-value ratio, loan amount, and property location.

Investment Property Loans vs. Conventional Loans: It highlights the difference between investment property loans and conventional loans. Investment property loans are often conventional loans with stricter borrower qualifications and higher down payment requirements, typically 15% or more compared to the 3% down payment for primary residences. Government-sponsored loans mainly focus on primary homeownership.

How to Get an Investment Property Mortgage: The article provides tips for obtaining an investment property loan at a favorable rate. These tips include improving your credit score, managing debt, comparing rate quotes from multiple lenders, and getting preapproved.

Compare Mortgage Lenders Side by Side: The article mentions the importance of comparing mortgage lenders to find the best option. It suggests using tools to evaluate lenders based on factors like rates and fees.

Types of Investment Property Mortgage Loans: It outlines various types of investment property loans, including:

Conventional loans, widely available from banks and credit unions.
Portfolio loans, held by the lender and not sold to secondary market investors.
DSCR loans, underwritten based on investment property income.
Non-warrantable condo loans, for condominium investment properties.
Hard money loans, short-term, high-interest loans from private lenders or investors.

Pros and Cons of Investment Property Mortgages: The article lists the pros and cons of investment property loans: Pros include the ability to borrow more, not requiring residence in the property, and potential tax deductions for mortgage interest and rental expenses. Cons include higher interest rates, stricter underwriting requirements, and the added risk for lenders.

Investment Property FAQs: The article likely addresses common questions related to investment property mortgages and provides information on mortgage rates in different U.S. states.

This information covers the key concepts presented in the article, and it's essential to keep in mind that the mortgage market can be dynamic, so staying updated with the latest information is crucial when dealing with investment properties and mortgages.

Compare Investment Property Rates Today | Bankrate (2024)