DSCR, Portfolio Strategy, and Investor Clients
An investment property is any property the borrower does not intend to occupy as a primary residence or secondary home. Occupancy fraud — representing an investment property as a primary residence — is one of the most common and actively investigated forms of mortgage fraud. Investment Property Financing Requirements Down payment: Single-family typically 15–25% minimum. 2–4 units: 20–25% minimum. Interest rate: Investment properties price 0.50–1.00% higher than comparable primary residence loans. Credit score: Most lenders require 680+; many require 720+ for investment properties. Reserves: 6 months PITI of the subject property, plus reserves for any other financed investment properties. Using Rental Income to Qualify For properties already owned: current leases and 24 months of Schedule E income. Generally 75% of gross rents (vacancy/maintenance factor). For the subject property being purchased: appraiser's market rent estimate — 75% of market rent used to offset PITI. Schedule E Analysis When a borrower has rental properties on their tax returns, the income or loss from Schedule E must be added or subtracted from qualifying income. Common add-backs from Schedule E include depreciation and mortgage interest.