Investing in real estate can be one of the most powerful ways to build long-term wealth. But if you're like most first-time investors, the big question is: How do you actually afford your first rental or flip?
The truth is, you don't need to be rich — but you do need a smart plan, a good credit score, and real savings. In this guide, we'll break down how to finance your first investment property — without taking on unnecessary risks or emptying your wallet.
Buying an investment property isn’t like buying your primary home. Lenders see investment properties as higher risk, so they tighten the rules.
Here’s what you’ll typically need to qualify:
Most banks will not approve a low-down-payment loan (like FHA or VA) for investment properties. You’ll be expected to show you have both strong credit and plenty of liquidity — because if times get tough, the lender wants reassurance you'll still make those payments.
Pro Tip: If you don't have at least 20% saved up plus extra reserve cash, you may want to wait before jumping into your first deal.
Many investors use standard conventional mortgages, just like a primary residence loan — but with stricter terms.
If you're buying a property that's already rented (or will be soon), DSCR loans look at the property’s income — not just your personal income.
Some lenders (especially local banks and credit unions) offer portfolio loans. These stay on the bank's books instead of being sold, offering more flexibility.
Hard money lenders are private individuals or companies that lend based on the property's value rather than your income or credit.
If you already own a home with good equity, you might not need a brand-new loan.
Let’s make it real:
If that sounds intimidating — good news! Some creative strategies can help lower the cash burden:
It’s easy to get excited and rush — but costly mistakes lurk. Avoid these rookie errors:
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Case Study: How Jason Bought His First Rental (Without Being a Millionaire)
Jason, a 32-year-old software developer, had a 720 credit score and about $60,000 saved up. Instead of buying a flashy sports car, he used his savings smartly:
- Found a $240,000 duplex
- Put 20% down ($48,000)
- Reserved $5,000 for repairs and $3,000 for reserves
- Rented out one unit immediately, living in the other to keep costs low
Because he met lender qualifications and planned carefully, Jason secured a great rate and positive cash flow from day one.
Financing your first investment property isn’t impossible — but it does require preparation.
You need:
The best deals aren’t reserved for millionaires — they’re secured by investors who come to the table qualified, educated, and ready.
👉 If you have at least a 680+ credit score and enough savings for a down payment, our team at Really Estate can help you find the right financing solution. Start by selecting your home type below and let’s build your real estate future together!
