Long-term financing for income-producing residential rental property.
A rental loan is long-term, amortizing financing on a residential property held as a rental investment. "Rental loan" is the catch-all term for permanent investment property mortgages — including conventional, DSCR, and portfolio programs. Rental loans are the long-hold debt that follows transitional capital (hard money, bridge) for buy-and-hold investors.
A rental loan is the permanent debt that finances a buy-and-hold investment property for the long term — typically 30 years. The two dominant rental loan products are conventional (the cheapest rate, but DTI-gated and capped at 10 financed properties) and DSCR (slightly higher rate, but property-qualified and unlimited portfolio scale). Both serve the same purpose: long-term debt on income property.
Rental loans differ from primary residence mortgages in several ways. Down payments are higher — typically 20–25% on investment property vs. 3–10% on primary. Rates are higher — 50–100 bps above primary residence pricing. Reserve requirements are stricter — typically 6 months of PITIA per investment property. And occupancy requirements differ — investment property is non-owner-occupied (NOO).
For investors, the choice between conventional and DSCR rental loans is mostly about portfolio scale. Early in a portfolio (1–4 properties), conventional rental loans usually win on rate. As DTI tightens, DSCR rental loans take over. By the time an investor has 5+ properties, almost all new acquisitions and refis are on DSCR or portfolio loans, with conventional reserved for primary home only.
The right rental loan structure depends on hold strategy. Buy-and-hold-forever investors want longest amortization, lowest rate, and most flexible prepayment — typically 30-year fixed DSCR or conventional. BRRRR operators often use 5/1 or 7/1 ARMs to lower initial rate, accepting reset risk because they plan to refi or sell within the fixed period anyway. The structure should match the actual hold plan.
| Purchase price | $425,000 |
| Down payment (25%) | $106,250 |
| Loan amount | $318,750 |
| Rate / term | 7.50% / 30-yr fixed DSCR |
| Monthly P&I | $2,229 |
| Monthly taxes + insurance | $485 |
| Total PITIA | $2,714 |
| Monthly gross rent | $3,600 |
| DSCR = $3,600 ÷ $2,714 | 1.33 |
Rental loans (investment property mortgages) have higher down payments (20–25%), higher rates (50–100 bps above primary), stricter reserves, and non-owner-occupied status. Primary residence mortgages allow lower down payments and rates because owner-occupancy is statistically less risky.
Conventional rental loans yes. DSCR rental loans no — they qualify on property rental income only.
Typically 20–25% on most programs. Some DSCR programs allow 15% with rate premiums; below 15% is unusual.
Yes on DSCR and portfolio programs — most are made directly to LLCs. Conventional generally requires individual borrowers, but the property can be transferred to an LLC post-closing in most cases.
Yes, by 50–100 bps typically. The premium reflects higher statistical default risk on non-owner-occupied properties and the loan-level price adjustments (LLPAs) Fannie / Freddie apply.
Matrix funds DSCR and portfolio rental loans on 1–8 unit residential nationwide. Up to 80% LTV, 30-year terms, LLC-friendly, no tax returns.
