If you’re a real estate investor looking to grow your rental property portfolio, understanding your financing options is essential. At Miranda Mortgage in Denver, we help new and experienced investors navigate the world of investment property loans with clarity and confidence. Whether you’re scaling from your first rental or expanding a portfolio of ten or more properties, having the right loan strategy can make all the difference.
This guide breaks down the different types of investment property loans available, explains how to work around common financing challenges like debt-to-income limits, and shares insights into which loan programs may suit your goals best.
An investment property loan is used to purchase real estate that generates rental income or is held for appreciation. Unlike a primary residence mortgage, these loans are underwritten with stricter guidelines, often requiring higher credit scores, larger down payments, and a strong financial profile.
These loans are designed for individuals or entities looking to build wealth through real estate—whether through long-term rentals, short-term vacation properties, or multifamily investments.
One of the biggest hurdles investors face is hitting a ceiling with their debt-to-income ratio, or DTI. This ratio compares your monthly debt obligations to your gross monthly income and determines your overall borrowing capacity.
Lenders calculate DTI differently depending on your employment type. If you’re W-2 employed, they typically use gross income. For self-employed borrowers, it’s often net income after expenses. The higher your DTI, the harder it becomes to qualify for traditional financing.
A common roadblock investors face is maxing out their DTI after just two or three properties. That’s why understanding your options—and planning strategically—is key to expanding your real estate holdings.
For most investors, conventional loans backed by Fannie Mae or Freddie Mac are the ideal starting point. These offer competitive interest rates, no prepayment penalties, and flexibility in using projected rental income to help qualify.
Depending on the property type, you can purchase with as little as 15% down. For example, a single-unit investment property typically requires a 15% minimum down payment, while two- to four-unit properties or short-term rentals may need up to 25%.
The real benefit of going conventional is that forecasted rental income can be used to offset your monthly mortgage payment—helping you qualify for more homes and expand your portfolio with less personal income required.
Once you’ve acquired several properties or run into DTI constraints, non-QM (non-qualified mortgage) loans become powerful tools. These loans are designed for investors whose income or credit profile may not fit the traditional mold but who are otherwise solid candidates based on property performance or business strength.
Debt Service Coverage Ratio (DSCR) loans assess the property’s ability to pay for itself. Instead of evaluating your income, lenders review whether the property’s rental income covers the full mortgage payment—principal, interest, taxes, and insurance.
If the property cash flows—meaning it earns at least $1 more than the monthly obligation—you may qualify, regardless of personal DTI. DSCR loans are ideal for scaling past the ten-financed property cap or for investors who prefer to keep personal finances separate from real estate deals.
Down payments for DSCR loans typically start at 20%, though in strong markets, some programs are now allowing 15%.
Self-employed investors often find it difficult to qualify for traditional loans because they deduct heavily for tax purposes. That’s where bank statement loans come in.
Instead of tax returns, lenders evaluate 12 to 24 months of bank deposits to calculate average monthly income. These can be personal or business accounts, depending on how income is tracked.
Bank statement loans can be used for primary homes, second homes, and investment properties—and may only require 10% down depending on the property type and financial profile. These are a flexible and increasingly popular option for freelancers, business owners, and gig economy professionals.
Asset qualifier loans are perfect for high-net-worth individuals who may not have consistent income but have substantial cash reserves or retirement funds. Rather than reviewing employment or income, these loans use liquid assets—like investment accounts, checking/savings balances, or retirement funds—to calculate your borrowing ability.
This strategy is especially useful for early retirees, recently self-employed individuals, or anyone with a strong asset base who prefers not to rely on employment-based qualifying criteria.
A thoughtful approach can help you qualify for more properties, even within the constraints of lender guidelines. Here are a few strategic tips:
Planning annually with both your lender and your accountant ensures you’re in the best position to meet your investment goals without surprises.
There’s no one-size-fits-all loan. Your ideal program depends on your portfolio size, income type, risk tolerance, and long-term goals.
Make sure to compare options and ask about things like prepayment penalties, which are common on non-QM loans and could limit flexibility.
At Miranda Mortgage, we understand the journey because we’ve lived it. Our founder, Naiely, was inspired by her mother’s path to homeownership and has turned that passion into helping others achieve financial freedom through real estate.
We serve Denver’s investor community with a tailored, education-first approach. Whether you’re just starting or looking to scale into multi-unit or short-term rentals, we’ll help you choose the right financing path—and make sure it aligns with your long-term goals.
We don’t just offer loans; we offer strategy, planning, and long-term partnership. You’ll know exactly what to expect, what to prepare for, and how to build a strong foundation for future deals.
Ready to find the right investment property loan for your next deal? Let’s talk. Schedule a free consultation today and let’s create a plan to grow your portfolio with confidence.
Call 303.520.1786 or email Naiely at Naiely@BarrettFinancial.com to get started.
You can also learn more about real estate financing options.
