Top financing options for investment properties in 2024

Investing in real estate remains one of the most reliable ways to build long-term wealth, but securing the right financing is crucial for success. In 2024, the landscape of investment property financing has evolved to include various options tailored to different investor profiles, market conditions, and financial goals. Understanding these options can help you optimize your purchase, manage risks, and maximize returns. This article explores the best financing methods available for investment properties this year, examining conventional mortgages, portfolio loans, private financing, and government-backed programs. By delving into their pros, cons, and suitability, you’ll get a clear picture of how to approach funding your next investment property.

Conventional mortgages: the standard investment loan

Conventional mortgages remain the most popular choice for real estate investors, especially for those who have strong credit scores and stable income. These loans typically require a minimum down payment of 15-25%, depending on the lender and property type. Interest rates are often competitive, and terms range from 10 to 30 years, offering flexibility in repayment.

In 2024, conventional loans are still favored because they generally offer lower rates compared to other options, especially for investors with a solid financial profile. However, lenders apply stricter qualification criteria for investment properties than for primary residences — expect higher credit score requirements and more stringent debt-to-income ratios.

Key factors that impact conventional mortgage approval:

• Credit score (usually 680+)
• Down payment size
• Property type (single-family homes tend to be favored)
• Rental income potential (sometimes considered to offset debt)

Portfolio loans: flexibility for diverse investment portfolios

For investors who own multiple investment properties or unique types of real estate, portfolio loans offer a tailored financing solution. Unlike conventional mortgages, portfolio loans are held by the originating lender rather than sold in the secondary market, giving lenders more freedom in underwriting.

These loans are ideal for those who don’t meet conventional lending standards due to income complexity or credit nuances. Portfolio lenders can offer customized terms, including down payments as low as 10%, interest-only periods, and loan structures for non-traditional properties such as multi-family units or mixed-use buildings.

Because they are more flexible, portfolio loans often come with higher interest rates, but the convenience and tailored service can outweigh the extra costs for experienced investors looking to expand their holdings.

Private and hard money lenders: quick funding with higher costs

When time is of the essence, or when traditional financing isn’t available, private and hard money lenders can be game-changers. These lenders focus primarily on the property’s value rather than the borrower’s creditworthiness, allowing for fast approvals and funding, often within days.

However, these benefits come with higher interest rates, typically ranging from 8% to 15%, and shorter loan terms — usually 6 to 24 months. This makes them suitable for fix-and-flip investors or those needing bridge loans to secure a property quickly before refinancing through conventional means.

Investors should carefully evaluate the repayment plan and exit strategy when using private financing, as the costs can significantly impact overall profitability if not managed well.

Government-backed programs: leveraging federal support

While government programs traditionally target primary residences, some programs support investment property financing under specific conditions. For example, Federal Housing Administration (FHA) loans allow financing on multi-unit properties (up to four units) if the borrower occupies one unit, blending homeownership with investment potential.

Additionally, the Department of Veterans Affairs (VA) offers loans for eligible veterans, which can sometimes be used for multi-unit homes, again requiring at least one unit to be owner-occupied.

Though these options have strict occupancy requirements, they provide lower down payments and competitive interest rates, making them attractive for owner-occupier investors looking to enter the market or diversify their portfolios.

Financing option	Typical down payment	Interest rates (2024)	Term length	Best for
Conventional mortgages	15-25%	5.5% – 7%	10-30 years	Investors with strong credit and stable income
Portfolio loans	10%+	6% – 8%	Varied, often flexible	Investors with multiple or unconventional properties
Private/hard money lenders	Variable, often 20%+	8% – 15%	6-24 months	Short-term investors and fix-and-flips
Government-backed programs	3.5% (FHA)	4.5% – 6%	15-30 years	Owner-occupiers investing in multi-unit properties

Conclusion

Choosing the right financing option for investment properties in 2024 requires careful evaluation of your financial situation, investment goals, and the property type you’re targeting. Conventional mortgages remain a solid choice for investors with strong credit profiles, while portfolio loans offer flexibility for those with diverse real estate holdings. Private and hard money lenders provide rapid access to capital at higher costs, suitable for short-term strategies such as flipping. Meanwhile, government-backed programs create opportunities for owner-occupiers investing in multi-unit properties, combining affordability with federal support.

Ultimately, the best financing strategy balances cost, terms, and risk management. By understanding the options available and aligning them with your investment plan, you can secure funding that not only enables property acquisition but also contributes to sustainable growth in your real estate portfolio.

Image by: Jakub Zerdzicki
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