April 21st, 2025
Purchase a HomeRefinance My Home
Real estate can be a powerful wealth-building tool—but growing a portfolio requires smart financing strategies. For Denver investors looking to purchase their first rental or scale from a few properties to a larger portfolio, understanding investment property loans is essential.
At Miranda Mortgage, we specialize in helping investors navigate the lending landscape, from conventional options to flexible non-QM alternatives. Whether you’re just getting started or trying to break past lending limits, our team can guide you to the right program for your investment goals.
An investment property loan is a mortgage used to purchase real estate that you don’t plan to live in. These properties are usually rented out, either long-term or short-term, and the financing is designed specifically for income-producing assets.
Unlike primary residence loans, investment loans tend to have stricter qualifying requirements and higher down payments. However, they also offer unique opportunities for investors to use rental income toward their approval, allowing them to build equity and generate cash flow without relying solely on personal income.
The biggest difference between a loan for an investment property and one for a primary residence lies in the way lenders assess risk. When you’re buying a home to live in, your personal income, employment, and creditworthiness are the main focus.
But with investment properties, lenders are more interested in the potential of the property to generate income. Depending on the loan type, they may use projected or actual rent to offset the mortgage payment. This can be a game changer—especially if you’re already carrying other mortgage debt or your income isn’t W-2 based.
That said, hitting the debt-to-income (DTI) limit is a common issue for investors. Once you’ve acquired two or three properties, many traditional lenders become hesitant. That’s where a deeper understanding of your options—and a solid financing strategy—comes into play.
Conventional loans are often the first step for real estate investors. They’re backed by Fannie Mae or Freddie Mac and typically offer favorable terms when used properly.
Here are a few common paths:
One of the biggest benefits of going conventional is the absence of prepayment penalties and generally lower interest rates compared to non-traditional options.
For those who’ve maxed out their DTI or want more flexibility, non-conventional (or non-QM) loans provide creative financing solutions.
A Debt Service Coverage Ratio (DSCR) loan allows you to qualify based on the property’s income—not your own. If the rental income covers the mortgage, taxes, insurance, and HOA fees (known as PITIA), you may be approved even if your personal income doesn’t meet conventional guidelines.
DSCR loans typically require at least 20% down, though some strong markets may offer 15% down programs. These loans are ideal for investors looking to:
For more on how this works, visit our DSCR Home Loan page.
Self-employed borrowers often struggle to qualify with traditional tax returns, especially when deductions reduce reported income. A bank statement loan uses 12–24 months of business or personal bank deposits to calculate qualifying income.
Down payments vary by property type, but primary residences can be financed with as little as 10% down. These loans can work well for:
If you have liquid assets—such as savings, investments, or retirement funds—you may qualify for an asset-based loan. Instead of income, lenders look at your account balances to determine your ability to repay the loan.
This is particularly useful for:
These loans don’t require pledging assets as collateral but do involve minimum balance requirements and specific qualification formulas.
A major advantage of investment property loans is the ability to use projected or current rental income in your approval process. Here’s how it typically works:
Understanding this shift is important for planning future purchases. Proper documentation and tax planning can make a big difference when qualifying for subsequent loans.
There’s no one-size-fits-all when it comes to investment financing. Your best loan option depends on:
For example, if you’re early in your investing journey, a conventional loan may offer the best terms and lowest upfront costs. But if you’re nearing DTI caps or looking for faster growth, a DSCR or bank statement loan may provide the flexibility you need.
At Miranda Mortgage, we know the challenges investors face when building a real estate portfolio. That’s why we provide more than just loan quotes—we help you build a financing roadmap.
We take the time to understand your strategy, then tailor your financing to fit. Whether you’re looking to purchase your first rental or expand your holdings, we’ll help you identify the most effective loan for each stage of your journey.
Our team also works closely with tax professionals and investor-friendly accountants to help you align your income reporting and investment goals with your financing needs.
Investment property loans open the door to long-term wealth, but only when used strategically. With the right guidance, you can overcome the challenges of debt-to-income limits, down payment requirements, and income documentation.
Ready to finance your next investment property? Miranda Mortgage is here to help.
Call us at 303.520.1786 or email Naiely@BarrettFinancial.com to schedule a consultation.
