How Much to Put Down on an Investment Property

How Much to Put Down on an Investment Property

For most investment properties, plan to put down 15% to 25% unless you qualify for a special loan program. The exact amount depends on the loan type, your credit profile, and whether the property will be a single-family home, a duplex, or a multi-unit building. A larger down payment lowers monthly costs and can unlock better terms, while a smaller one preserves cash for repairs and vacancies.

Down Payment by Loan Type

• Conventional loan: 15% to 25% for a single investment property; 25% if you own 6+ financed properties.
• FHA loan: 3.5% down, but only for 1- to 4-unit properties where you occupy one unit.
• VA loan: No down payment for eligible veterans on a primary home, but investor use is restricted.
• Portfolio and seller financing: Terms vary widely; some lenders accept 10% or less.

What Affects the Required Down Payment

Lenders weigh your credit score, existing debt, rental income projections, and the number of financed properties you already own. Properties in weaker markets or those needing significant repairs may require a higher down payment because of the added risk. Loan-to-value ratios are tighter for investment properties than for primary residences, which is why the standard down payment is higher.

Trade-Offs: Larger vs. Smaller Down Payment

A bigger down payment reduces the loan amount, lowers monthly payments, and often secures a lower interest rate. It also gives you a cushion against market dips and vacancy periods. A smaller down payment keeps more capital available for renovations, reserves, or acquiring additional properties, but it increases leverage and monthly cash flow pressure.

Other Costs to Budget Beyond the Down Payment

Closing costs for investment properties typically run 2% to 5% of the purchase price. Add reserves for repairs, a vacancy fund, and the down payment itself. Lenders may also require 6 to 12 months of mortgage payments in reserve after closing, so the cash needed at signing is higher than the down payment alone.