Here's the reality: a handful of programs let you buy income-producing property with 10% down or less. Some go even lower.
The catch? Most require you to live in the property, at least temporarily. Others involve trade-offs in rate, reserves, or lender type. Many investors give up on scaling their portfolio simply because they never looked past the 20% myth.
This guide breaks down which loan programs actually allow 10% down, who qualifies, and how to combine strategies to buy your next property with less cash out of pocket. We'll also look at how Lendora Funding supports investors navigating these options.
Key Takeaways
- Conventional non-owner-occupied loans typically require 15-25% down; some owner-occupied and specialty paths can start near 10%
- Credit score, DTI ratio, and property type all shift your actual down payment requirement
- House hacking, seller financing, and portfolio lenders can stack to cut upfront cash needs
- Lendora Funding helps investors pursue investment property and fix-and-flip financing with less cash upfront
What Counts as a 10% Down Payment Investment Property Loan
A "10% down" loan means a 90% loan-to-value (LTV) ratio — the loan amount is 90% of the property's value, and you cover the rest.
For true non-owner-occupied properties, 10% down is rare under conventional guidelines. Per Freddie Mac's maximum LTV requirements, published caps are:
- 85% LTV on a 1-unit investment property (15% down)
- 75% LTV on 2-4 unit investment properties (25% down)
Fannie Mae's Eligibility Matrix tracks those figures closely. Primary residences, by contrast, can go up to 95% LTV on 1-unit homes. Lenders treat investment properties as riskier because owners are more likely to walk away from a rental than their own home when finances get tight.
Why Lenders Price Investment Loans Higher
Fannie Mae's loan-level price adjustment (LLPA) matrix charges investment-property borrowers 1.125% at LTVs up to 60%, climbing to 4.125% above 80% LTV, per Fannie Mae's LLPA Matrix. That cost is baked into your rate or closing costs—not a separate fee—but it adds up fast.
The National Association of Realtors reports a median down payment of 19% across all buyers in 2025, though that figure blends primary residences with investment purchases rather than investors alone.
What Is a Good LTV Ratio for an Investment Property?
Standard investment loans run 75-85% LTV, meaning 15-25% down. Anything above 90% LTV (10% down or less) is considered high-risk territory. Lenders usually offset that risk by requiring:
- Credit scores of 700+
- Larger cash reserves after closing
- Stronger DTI ratios
- Stricter eligibility than standard conventional investment guidelines
Loan Programs That Allow 10% Down or Less
The programs below make lower down payments possible, but nearly all require you to occupy at least one unit.
FHA Loans (3.5-10% Down) FHA loans work on 1-4 unit properties if you live in one unit. HUD's tiered system requires:
- Credit score 580+ for maximum financing (3.5% down)
- Scores 500-579 cap at 90% LTV (10% down)
- Below 500: ineligible
This is one of the most accessible house-hacking tools available.
Conventional Owner-Occupied Multi-Unit Programs Fannie Mae's HomeReady and Freddie Mac's Home Possible allow 3% down on 1-4 unit properties. You must occupy one unit and meet income limits (generally 80% of area median income).
VA Loans (0% Down) Eligible veterans can buy a multi-unit property with zero down, according to the VA's purchase loan program, as long as they occupy one unit.
Portfolio and Non-QM Lenders For genuine non-owner-occupied properties, some portfolio and DSCR lenders offer 10-15% down, though 15-20% is more common. These loans qualify on the property's rental income rather than your personal income, and they typically carry higher rates.
This is where Lendora Funding comes in. Lendora Funding works with real estate investors on residential, rental, and fix-and-flip financing, matching borrowers to options that fit their credit and income profile.
The key distinction: low-down-payment programs almost always require owner-occupancy. If you're buying a true rental you'll never live in, expect closer to 15-20% down unless a portfolio lender's terms work in your favor.
How to Qualify: Credit, DTI, and Reserves
Credit Score Expectations
Requirements vary by program:
- Conventional: 620+ is still a common lender overlay; Fannie Mae's DU has no hard credit floor
- Portfolio/non-QM: varies widely by lender
- FHA: owner-occupied only (including 2-4 unit house hacks); 580+ for best terms, 500-579 with restrictions
DTI Ratios and Rental Income
Fannie Mae caps DTI at 50% for automated underwriting, or 36-45% for manual review depending on compensating factors, according to Fannie Mae's selling guide.
Here's a detail investors often miss: lenders don't count 100% of rental income toward qualifying. Fannie Mae and Freddie Mac both use 75% of gross lease or market rent, holding back 25% for vacancy and maintenance costs.
Cash Reserve Requirements
Investment-property transactions typically require six months of reserves (measured in mortgage payments), per Fannie Mae's guidelines. Additional financed properties can push that requirement higher.
How Much Income Do You Need to Borrow $400,000?
Income need depends on your rate, taxes, insurance, and other debts. As a rough example, a $400,000 loan at 7% is about $2,660 in principal and interest. Add roughly $600 for taxes and insurance and PITI lands near $3,260.
At a 45% DTI with no other monthly debts, that points to about $7,250 in gross monthly income (around $87,000 a year). Other debts raise what you need, so run current rates through a mortgage calculator for your exact figure.
Strategies to Avoid a Large Down Payment
You don’t always need 20% down to buy investment real estate. Several paths can cut the cash due at closing while still getting you approved.
House hacking is still the most accessible route. Buy a 2-4 unit property, live in one unit, rent the rest, and qualify for FHA, HomeReady, Home Possible, or VA terms instead of investment-property pricing.
Ways to Reduce Cash Due at Closing
You can also stack approaches when one path alone isn’t enough:
- House hack a multi-unit property to access owner-occupied financing
- Negotiate seller financing — the property owner acts as the lender, with terms you negotiate directly
- Tap home equity through a cash-out refinance on an existing property to fund your next purchase
- Partner with another investor to split the down payment and share equity
- Improve your credit and DTI before applying to unlock lower down payment tiers
On that last point, Lendora Funding's credit repair program works with clients to improve credit standing strategically before they apply for financing, which can open doors to better loan terms.
The 2% and 7% Rules
Lower down payments often mean a larger loan balance and higher monthly carrying costs, so cash flow screening matters more before you buy. Investors use these rules as quick filters, not lending requirements:
- 2% rule: Monthly rent should equal at least 2% of the purchase price
- 7% rule: Annual rent should equal at least 7% of the purchase price
Neither rule is enforced by lenders. They're back-of-napkin filters to gauge whether a deal's cash flow potential justifies a closer look.
Weighing the Pros and Cons of a Smaller Down Payment
A 10% down loan keeps more cash in your pocket for renovations, reserves, or your next deal. But it comes with trade-offs:
| Factor | 10% Down | 20-25% Down |
|---|---|---|
| Upfront cash | Lower | Higher |
| Monthly payment | Higher | Lower |
| Mortgage insurance | Often required | Usually avoided |
| Interest rate/pricing | Higher LLPA cost | Better pricing |
| Reserve requirements | Often stricter | Standard |
Higher LTV means higher risk pricing. Fannie Mae's LLPA structure charges nearly four times more at LTVs above 80% compared to loans under 60% LTV.
Run your specific numbers through a mortgage calculator to compare total costs across scenarios before deciding.
The right choice depends on your goals. If preserving capital for a second property or renovation budget matters more than minimizing monthly payments, 10% down can make sense, as long as you've accounted for the higher carrying costs.
Frequently Asked Questions
How much money do you need for a $500,000 house down payment?
A 10% down payment would be $50,000, while 20-25% down would range from $100,000 to $125,000, depending on the loan program and occupancy status.
What is the cheapest way to borrow $100,000?
HELOCs typically carry lower upfront costs than cash-out refinances, which run about 2-5% of the loan amount in closing costs. Conventional loans often offer the best rates but require more qualification steps.
Is it smart to borrow against investments?
It depends on your risk tolerance. Margin loans, HELOCs, and 401(k) loans can provide fast access to capital, but market drops or job loss can create serious repayment pressure.
Can a 70-year-old get a 30-year mortgage?
Yes. There's no age limit on mortgage eligibility under fair lending laws. Income, credit, and reserve requirements still apply the same way they would for any other borrower.
What is a good loan-to-value ratio for an investment property?
Most investment loans land at 75-85% LTV (15-25% down). 90% LTV (10% down) is available on some programs but is treated as higher-risk and usually needs stronger credit and reserves.
How can I avoid a 20% down payment on an investment property?
FHA, house hacking, and portfolio lender programs can all reduce your down payment below 20%, though most require owner-occupancy. Contact Lendora Funding to discuss options suited to your specific financing needs.
