You find a fourplex at $410,000 that rents for $4,600 a month. You’ve got 25% down and a 740 credit score. The first lender says no because you already have five financed properties. The second one wants 12 months of reserves on top of the down payment. The third approves you in eleven days at 7.9%.
Same borrower, same property, three different answers. That’s the reality of investor lending. Nobody is “best” in the abstract — the right lender depends on how many doors you own, whether you can document income, and how long you plan to hold. Here’s how the field actually breaks down.
What Separates a Real Investor Lender From a Rate Quote
Advertised rates tell you almost nothing. A 6.875% quote that requires full documentation, six months of reserves on every property you own, and a 45-day close is worse than a 7.5% portfolio loan that closes in 21 days with an LLC on title.
Four things matter more than the note rate:
- Financed property limits. Fannie Mae allows up to 10 financed properties, but pricing gets worse after four, and loans seven through ten cap at 75% LTV. Freddie Mac stops at six. Go past those numbers and you’re in portfolio or DSCR territory whether you like it or not.
- Reserve requirements. Six months of principal, interest, taxes and insurance per property is common. Some lenders want reserves calculated on every financed property, not just the subject one, which can turn a $30,000 reserve into $90,000 overnight.
- Rental income treatment. Most conventional lenders count 75% of gross market rent. If you’re using lease agreements instead of a 1007 appraisal, that changes your debt-to-income math considerably.
- Entity vesting. Buying in an LLC is routine for portfolio and DSCR lenders and a headache for most national banks. Ask before you sign a purchase contract in your LLC’s name.
Portfolio Lenders: The Quiet Workhorses
Community banks and credit unions that hold loans on their own balance sheet don’t care about Fannie Mae’s guidebook. They care about whether the deal makes sense and whether you’ll pay them back. A $400 million-asset bank in a mid-sized city will often do 20% down on a 5/1 ARM for a local investor with a decent relationship, and they’ll count rental income more generously than an automated underwriting system will.
Call and ask for the commercial real estate or rental portfolio officer, not the residential mortgage desk. Expect manual underwriting, a PDF application, and a two-to-three-week appraisal process. Rates on 30-year fixed money usually aren’t competitive, but ARMs often are. This is also the channel where a six-property investor with a messy Schedule E gets treated like a human being. If you’re still mapping out which loan products fit your strategy, our breakdown of the best mortgage types for rental property investors covers when a portfolio ARM beats a DSCR loan.
National Banks and Credit Unions for Conventional Investor Loans
If you own three properties or fewer and can document income, the conventional route is usually cheapest. Axos Bank is one of the few online-first institutions that has stayed genuinely active in investor lending, with competitive pricing and a straightforward application process, though there are details worth reading before you commit — our Axos Bank mortgage review walks through the fine print. Credit unions like Navy Federal and PenFed occasionally beat big-bank pricing on second homes and investment condos, but their overlays vary wildly by region.
Above the conforming limit, the lender pool shrinks fast. Investor jumbo loans typically want 25% to 30% down, 700+ scores and reserves measured in years rather than months. Our guide to lenders that approve jumbo loans above $806,500 is worth reading if your purchase price puts you in that bracket.
DSCR Lenders: Kiavi, Visio, Lima One, CoreVest and Friends
Debt service coverage ratio loans qualify you on the property’s rent, not your tax returns. No W-2s, no Schedule E, no debt-to-income calculation. The lender divides gross rent by the full payment (principal, interest, taxes, insurance, and HOA) and wants a ratio somewhere between 1.0 and 1.25.
In practice:
- Kiavi is fast and built for fix-and-flip and rental investors, with aggressive timelines and a portal that doesn’t require a phone call.
- Visio Lending focuses almost exclusively on long-term rental loans, including 30-year terms and vacation-rental programs that use market data rather than a signed lease.
- Lima One Capital does both bridge and rental products and will lend on portfolio bundles once you’re past a handful of properties.
- CoreVest (now part of Redwood Trust) is the go-to once you’re financing eight or ten properties at a time or want a single cross-collateralized portfolio loan.
- Easy Street Capital and similar brokers shop your file across multiple DSCR wholesalers, which saves legwork if your scenario is unusual.
Rates on these products run roughly 7.5% to 9.5% depending on credit, LTV and DSCR. Watch the prepayment penalty: a 5-4-3-2-1 structure is standard and fine for a ten-year hold, painful if you plan to sell in year two. Our piece on mortgage types for real estate investors maps out which of these structures suits flips versus buy-and-hold.
Hard Money and Bridge Lenders for Rehabs
Short-term money at 10% to 13% with two to four points upfront sounds brutal, and it is, but a fix-and-flip loan funds in seven to ten days and lends on after-repair value up to 75%. For a property that won’t appraise conventionally until the kitchen is finished, that’s the only financing that exists. Use it for the rehab, then refinance into a DSCR loan once the unit is leased and stabilized.
That exit matters more than the entry. Get a written sense of the takeout lender’s requirements before you close on the bridge loan. Our guide to mortgage lenders for refinancing where the math actually works covers how to model the break-even on that second transaction.
Five Questions to Ask Before You Commit
Run every quote through the same filter, because the numbers on the loan estimate aren’t the whole cost:
- How many financed properties will you lend against, and what changes at property five or six?
- Are reserves calculated on all my properties or just this one?
- What’s the prepayment penalty, exactly, and does it survive a refinance?
- Will you lend to an entity, and do you require a personal guarantee?
- What DSCR do you need, and do you use market rent or the signed lease?
Get those five answers in writing from three lenders and the comparison stops being about rate and starts being about which constraints you can live with.
The Scaling Problem Nobody Warns You About
The lenders that are cheapest at two properties are often the ones that shut you out at six. Conventional financing gets more expensive with each additional financed property, and once you’re past ten, Fannie and Freddie are simply gone. The investors who keep buying through that wall usually line up portfolio relationships and a DSCR lender before they need them, not after a deal goes sideways.
Practical move: at property four, open a conversation with two community banks and one DSCR lender. Get pre-qualified on paper even if you don’t use it for a year. When the eleventh deal shows up with a 20-day close, you’ll be the borrower with three phone numbers instead of the one scrambling through an automated pre-approval that’s going to stall on reserve calculations.