Investment property down payment, and how much cash you need

The down payment on an investment property is usually 15% to 25% of the price. Fifteen percent is the conventional minimum for a one-unit rental and 25% for two to four units, while DSCR loans, which qualify on the property's rent, commonly ask for 20% to 25%, and more for short-term rentals or lower credit scores. Plan for more than the down payment, too: closing costs, prepaid taxes and insurance, and reserves of several months of payments that the lender wants to see left in the bank after closing.

How much do you need to put down?

The minimum depends on the loan, the number of units, and whether you will live there.

Loan	How you qualify	Minimum down payment
Conventional investment loan, one unit	Your income, debts and credit	15%
Conventional investment loan, 2 to 4 units	Your income, debts and credit	25%
DSCR loan, long-term rental	The property's rent against its payment	Commonly 20% to 25%; 15% at a few lenders with top credit
DSCR loan, short-term rental	Booking history, a projection or market rent	Often about 5 points more than the same long-term loan
No-ratio or below-1.00 DSCR loan	Little or no rent test	Often 25% to 35%
Conventional loan on 2 to 4 units you live in	Your income, and part of the rent	5%
FHA loan on 1 to 4 units you live in	Your income, and part of the rent	3.5%

The conventional figures come from Fannie Mae's and Freddie Mac's limits: as of 2026, Freddie Mac's published maximum loan-to-value for an investment purchase is 85% for one unit and 75% for two to four units. The DSCR ranges are the usual ones across lenders, which each set their own and change them often. The last two rows are owner-occupied loans: you must genuinely live in one of the units, so they are a way to start, not a way to buy a rental you never live in.

What decides your down payment?

The down payment is the other side of the loan-to-value ratio (LTV): a 75% LTV loan means 25% down. Lenders publish a grid of maximum LTVs, and where your file lands on it sets your minimum. The article on the loan-to-value ratio explains the math.

Credit score. The highest leverage is often reserved for scores around 700 or 740 and up.
Coverage. On DSCR loans, a ratio of 1.25 or more opens more leverage and better pricing than 1.00.
Property type. Condos, rural homes and 2 to 4 units often get less leverage than a single-family house.
Loan size. Larger loans usually carry lower maximum LTVs.
Short-term or long-term. Short-term rentals commonly get about 5 points less.
Experience. Some programs ask first-time investors for more down or more reserves.
Price against appraisal. LTV is measured on the lower of the price and the appraised value. If the appraisal comes in under the price, the gap comes out of your pocket.

The guide to DSCR loan requirements covers the credit, coverage and reserve thresholds in detail.

The cash you need beyond the down payment

Closing costs. Origination of commonly 1 to 2 points (1% to 2% of the loan), lender underwriting and processing fees, the appraisal (commonly $400 to $1,000, more for 2 to 4 units or a short-term rental analysis), title insurance, settlement and recording fees, and transfer taxes where they apply.
Prepaid items and escrow deposits. Interest from closing to the end of the month, the first year's insurance premium, and a cushion of taxes and insurance in the escrow account.
Reserves, covered below.
The earnest money deposit, which is credited back at closing but leaves your account weeks earlier.
Make-ready costs: repairs before the first tenant, and for a short-term rental, the furniture and setup.

Reserves: the cash that has to stay in the bank

Reserves are liquid funds left after closing, counted in months of the full payment (principal, interest, taxes, insurance and dues, or PITIA; see the article on PITIA).

Agency loans. Fannie Mae's automated underwriting requires six months of PITIA on an investment property. If you own other financed properties, it adds a percentage of their combined loan balances: 2% for one to four financed properties, 4% for five or six, and 6% for seven to ten.
DSCR loans. Commonly 2 to 12 months, often 6, with more asked for larger loans, lower coverage ratios and first-time investors.
What counts. Checking, savings and brokerage accounts count; retirement accounts usually count at a discount, since withdrawing can cost taxes and penalties.

Where the down payment can come from

Source	Usually allowed?	What lenders want to see
Savings and checking	Yes	Two months of statements, every page; large deposits explained
Brokerage accounts	Yes	Statements, and proof of the sale if you sell to close
Retirement accounts	Often, by withdrawal or a plan loan	Statements and the withdrawal or loan terms; taxes and penalties may apply
Sale of another property	Yes	The settlement statement from that sale
Credit line or cash-out on another property	Generally yes	The loan's terms and the transfer; the new payment counts as a debt on income-qualified loans
A partner's money	Through a shared entity, usually	The operating agreement; the partner may have to guarantee the loan
Gifts	Not on agency investment loans; many DSCR lenders limit or refuse them	A gift letter and the transfer, where allowed
Seller credits	Not for the down payment; capped at 2% on agency investment loans	The purchase contract

Two of those rows come straight from Fannie Mae's rules. Gift funds may not be used for an investment property, only for a principal residence or second home. And borrowed funds secured by an asset, such as a home equity line or a loan against stocks or a 401(k), are an acceptable source for the down payment, closing costs and reserves; a loan against real estate counts as a monthly debt, while one secured by your own financial assets does not have to. Money from selling another rental can also move through a tax-deferred swap: see the guide to the 1031 exchange.

Sourced and seasoned: proving the money is your own

Lenders want to see that the down payment is your own and has been for a while.

Sourced means traceable. A deposit that is not your paycheck needs a paper trail: the statement from the account it came from, a settlement statement, or a short letter of explanation.
Seasoned means it has sat in your account long enough, often about 60 days, or across the two months of statements you provide.
Cash deposits are the hardest to source. Move money between your own accounts by transfer, not in cash.
Avoid opening new credit before closing. A new loan or a maxed card can lower your score a tier and the leverage with it.

Can you buy a rental with less down?

Yes, but each route moves the cost somewhere else.

Live in it first. A 2 to 4 unit home you live in can be bought with 5% down conventionally or 3.5% with an FHA loan, renting the other units. You must actually live there.
Use equity you already have. A credit line or cash-out refinance on another property funds the down payment, at the cost of a second payment.
Bring a partner. Their cash, your work, and an agreement that says who owns what.
Negotiate seller financing. A seller who carries part of the price can lower the cash at closing, if the first lender allows it.
Buy, fix and refinance. Short-term money buys and repairs, and a refinance at the new value pulls cash back out. The guide to the BRRRR method covers how it works and where it goes wrong.

Is a bigger down payment better?

More down lowers the payment, improves the coverage ratio, and can move you into a better pricing tier. It also locks up cash you may need for reserves, repairs or the next property. The right amount is often the least that gets you the pricing tier and coverage you want, with healthy reserves left over. GoDoor's quote calculator shows the payment, the coverage ratio and the cash to close at different down payments for one property.

A worked example: 25% down against 20% down on a $400,000 rental

Every figure is an example, including the 7.5% rate. The house rents for $3,200 a month, with taxes of $400 and insurance of $175 a month.

	25% down	20% down
Down payment	$100,000	$80,000
Loan	$300,000	$320,000
Principal and interest (7.5%, 30 years)	$2,098	$2,237
Full payment (PITIA): P&I + $400 + $175	$2,673	$2,812
Coverage ratio: $3,200 ÷ PITIA	1.20	1.14
Closing costs	$13,150	$13,450
Reserves: 6 × PITIA	$16,038	$16,872
Total cash needed	$129,188	$110,322

Closing costs at 25% down are origination of 1.5 points ($4,500), lender fees ($1,800), the appraisal ($650), title, settlement and recording ($3,200) and prepaid interest and escrow deposits ($3,000): $4,500 + $1,800 + $650 + $3,200 + $3,000 = $13,150. At 20% down, origination on the larger loan is $4,800, so the total is $13,450.

Totals: $100,000 + $13,150 + $16,038 = $129,188, and $80,000 + $13,450 + $16,872 = $110,322. Putting 5 points more down costs $18,866 more cash and lifts the coverage from 1.14 to 1.20. Whether that is worth it depends on whether 1.14 clears the lender's minimum and how much the pricing improves at the lower leverage.

If you plan to buy through a company rather than in your own name, the guide to buying a rental property in an LLC covers what changes in the paperwork and the guarantee.

Frequently asked questions

What is the minimum down payment for an investment property?

On a conventional loan, 15% for a one-unit rental and 25% for two to four units. DSCR loans commonly ask for 20% to 25%, and often about 5 points more for a short-term rental. You can put down less only on a home you will live in, such as 5% on a conventional loan or 3.5% with FHA for a 2 to 4 unit property.

Can I use gift money for an investment property?

Not on a conventional loan sold to Fannie Mae: its rules allow gift funds only for a principal residence or second home. Many DSCR lenders limit or refuse gifts as well, so ask before the money moves. If a relative wants to help, a documented loan secured by an asset, or a partnership with clear terms, may be treated differently.

Can I use a HELOC for a down payment on a rental property?

Generally yes. Fannie Mae accepts borrowed funds secured by an asset, such as a home equity line on your own home, for the down payment, closing costs and reserves, and counts the new payment as a debt. DSCR lenders set their own rules. Document the draw and the transfer, and make sure both properties still work with the extra payment.

Is the down payment on an investment property tax deductible?

No. The down payment is part of what you paid for the property, its basis, which you recover over the years through depreciation on the building, not as a deduction in the year you buy. See the guide to rental property depreciation. This is general education, not tax advice; confirm your situation with a CPA.

Do you need 20% down for a rental property?

Not always. Conventional investment loans allow 15% down on a one-unit rental, though the price is better with more. DSCR loans commonly ask for 20% to 25%, and short-term rentals often more. The less you put down, the higher the payment and the lower the coverage ratio, so check that the rent still covers it.

Can I put 10% down on an investment property?

Not on a conventional investment loan, where the minimum is 15% for one unit. You can put down less on a 2 to 4 unit home you will live in, with 5% conventional or 3.5% FHA. Otherwise, investors who bring 10% of their own cash usually borrow the rest of the down payment against another asset, which adds a payment to the deal.

Sources

General education, not financial, tax or legal advice. Figures are examples: rates, rules and programs change, and every lender sets its own. Last checked November 4, 2026.