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Best Investment Property Mortgage Rates
If you’re thinking of purchasing an investment property, you may want to know more about how an investment property mortgage differs from a regular mortgage. Investment property mortgages are similar to traditional mortgages, but are often accompanied by higher interest rates and stricter eligibility requirements to borrowers. This is because lenders often view investment property mortgages as riskier than traditional mortgages, since borrowers are less likely to default on a mortgage for their primary residence.
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Current mortgage rates
According to Bankrate’s latest survey of the nation’s largest mortgage lenders, these are the current refinance average rates for a 30-year, 15-year fixed and 5/1 adjustable-rate mortgage (ARM) refinance rates among others.
| Product | Interest Rate | APR |
|---|---|---|
| 30-Year Fixed Rate | 3.030% | 3.370% |
| 30-Year FHA Rate | 3.240% | 3.740% |
| 30-Year VA Rate | 2.960% | 3.120% |
| 30-Year Jumbo Rate | 3.090% | 3.210% |
| 20-Year Fixed Rate | 2.980% | 3.270% |
| 15-Year Fixed Rate | 2.560% | 2.890% |
| 15-Year Fixed Jumbo Rate | 2.600% | 2.660% |
| 5/1 ARM Rate | 3.060% | 4.060% |
| 7/1 ARM Rate | 2.950% | 3.960% |
| 7/1 ARM Jumbo Rate | 2.910% | 3.930% |
| 10/1 ARM Rate | 3.040% | 3.910% |
Rates data as of 10/21/2020
Best investment property mortgage rates of 2020
- Rocket Mortgage – Best for online application
- Better Mortgage – Best for preapproval
- New American Funding – Best for loan options
- Navy Federal Credit Union – Best for service members
- PNC Bank – Best for online tools
- SoFi – Best for low rates
- Guaranteed Rate – Best for customer satisfaction
Best investment property lenders of 2020
| Lender | 30 Year Fixed APR | Eligibility Criteria | Key Benefits |
|---|---|---|---|
| Rocket Mortgage | 3.373% | 620 | Flexible options and easy application |
| Better Mortgage | 3.14% | 620 | Streamlined application and no commission fees |
| New American Funding | 2.940% | 620 | Wide variety of mortgage types |
| Navy Federal Credit Union | 3.20% | varies | Low rates and no prepayment penalties |
| PNC Bank | Varies | 620 | Online savings tools and resources |
| SoFi | Varies | 660 | Easy application and competitive pricing |
| Guaranteed Rate | Varies | 580 | Neighborhood data and local experts |
Best for online application – Rocket Mortgage
Rocket Mortgage takes the stress out of applying for a mortgage with a quick and easy online application process.
It offers a variety of different investment property mortgage options, including fixed mortgages, adjustable mortgages, FHA and VA loans. Rates with Rocket Mortgage start at 3.373% APR for a 30 year fixed rate mortgage. Its online application makes it easy to start an investment journey in real estate, no matter what kind of mortgage you need.
Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional loan. For more information on investment property mortgage loans, please visit the lender site.
Best for preapproval – Better Mortgage Company
Borrowers can apply entirely online and can be preapproved in as little as three minutes.
Better Mortgage prides itself on reinventing the mortgage industry to streamline the application process, eliminating unnecessary fees and extras steps so that the mortgage application process is as painless as possible. The lender features no commission, instant loan estimates and a simple, transparent application process.
Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional loan. For more information on investment property mortgage loans, please visit the lender site.
Best for loan options – New American Funding
If you’re looking for options when it comes to an investment property mortgage, New American Funding won’t disappoint
This lender offers a wide variety of different types of home loans to fit your needs. These include 30-year fixed-rate mortgages, 15-year fixed-rate mortgages, VA loans, FHA loans, conventional loans, and others. This gives you the option to tailor your loan to fit your specific needs, depending on your age, income and personal history.
Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional loan. For more information on investment property mortgage loans, please visit the lender site.
Best for service members – Navy Federal Credit Union
Navy Federal Credit Union is a not-for-profit credit union that serves members of the armed forces, veterans and their families, including individuals serving with the Army, Marine Corps, Navy, Air Force and Coast Guard.
This lender offers 15-year conventional fixed-rate mortgages for investment properties, with a rate of 3.22% APR. The mortgage requires a 25% down payment, which may be higher than some other lenders. Investment property mortgages from Navy Federal Credit Union feature no prepayment penalties, so you can pay off your loan any time you like. And if you already have an existing investment property mortgage, you may be eligible to refinance through this lender.
Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional loan. For more information on investment property mortgage loans, please visit the lender site.
Best for customer service – PNC Bank
PNC Bank offers a variety of investment property mortgages, including fixed-rate mortgages, adjustable-rate mortgages, jumbo loans, FHA loans, VA loans and specialized loans.
Fixed-rate and adjustable-rate mortgages have terms between 10 and 30 years, with down payments as low as 3% and loan amounts up to $510,400. Jumbo loans have terms between 15 and 30 years along with a variety of different payment options. PNC also offers excellent customer service, with a variety of educational and savings tools customers can use to understand their finances, stick to a budget and save money over time.
Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional loan. For more information on investment property mortgage loans, please visit the lender site.
Best for low rates – SoFi
While SoFi may have made a name for itself through its student loan refinancing services, this lender also offers a variety of other products, including investment property mortgages.
SoFi features extremely competitive rates, along with the option to prequalify and an easy, stress-free application process. Depending on your financial situation, you may be able to qualify for a mortgage with as little as 10% down. SoFi offers 30-year, 20-year, 15-year and 10-year fixed mortgages.
Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional loan. For more information on investment property mortgage loans, please visit the lender site.
Best for customer satisfaction – Guaranteed Rate
Guaranteed Rate offers a variety of different kinds of mortgages, including 30-year fixed rates mortgages, 15-year fixed rate mortgages, adjustable rate mortgages, jumbo loans, FHA loans, VA home loans and interest only mortgages.
Guaranteed Rate is a good choice for an investment property mortgage if you’re looking for a lender with excellent customer satisfaction ratings. The lender claims that 96% of customers would recommend Guaranteed Rate to their friends and family. Guaranteed Rate also features real-time neighborhood data, trusted local experts, and borrowers can apply online or in person.
Note: The lender information (Min. Credit Score and Min Down Payment) included refers to a conventional loan. For more information on investment property mortgage loans, please visit the lender site.
What is an investment property mortgage?
Investment property mortgages are mortgages that individuals take out on properties that they plan to rent rather than live in. These residences are known as investment properties. Investment property mortgages tend to have higher interest rates than traditional mortgages, and they may have stricter eligibility requirements. This is because investment properties present more of a risk to potential lenders, since property owners are more likely to stop payments on an investment property mortgage than on the mortgage for the house that they actually live in. Property owners may also have trouble paying an investment property mortgage if they struggle to find tenants to rent the house or apartment.
How should I choose the right investment property mortgage?
Finding the right investment property mortgage will depend on your financial situation and what loans you qualify for. In general, you should look for mortgages with low interest rates and few fees. If you plan on buying a multi-unit property and living in one of the units, you may also qualify for an FHA loan or a VA loan, as long as the property has a maximum of four units.
Too long, didn’t read?
Investment properties can be a great way to diversify your investment portfolio and earn rental income. However, investment property mortgages tend to have higher rates and stricter requirements than traditional mortgages. If you plan on applying for an investment property mortgage, it’s a good idea to have a sizable down payment saved up and to be as financially stable as possible.
We welcome your feedback on this article and would love to hear about your experience with the investment property mortgages we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.
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Methodology
We’ve created the SimpleScore to help you objectively compare products and services here at The Simple Dollar.
Our editorial team:
- Identifies five factors to compare across each brand
- Determines the rating criteria for each factor
- Calculate an average of those five factor scores to get one SimpleScore
We break down each of these five factors and their rating criteria for our review of the best mortgage companies.
Why do some brands have different SimpleScores on different pages?
Some brands like Bank of America, Wells Fargo, and Chase have different SimpleScores because they offer more than one financial solution — like home loans, auto loans, personal loans and more.
For instance, in our Bank of America Mortgage Review, we give the company a 3.8 out 5 based on our five rating factors for mortgages. In our Bank of America Auto Loans Review, we give the company a 4.4 out of 5 based on our rating factors for auto loans. By tailoring our SimpleScore to each financial solution, we’re able to give you a more accurate view of a brand’s services and how it compares to competitors’ services.
Perks
Mortgage lending companies that provide more perks receive a higher score from us.
Hard/Soft credit checks
We know that credit checks affect your score –– that’s why we favor companies that offer soft credit checks or hard credit checks when you want to see your pre-approval rates.
Customer satisfaction
We use the J.D. Power 2019 Mortgage Origination Satisfaction Study℠ to find out how customers rate their experience with each company. (If a company is not included in J.D. Power’s study, we skip this rating factor and average the remaining factor scores.)
Product variety
Mortgage lenders that offer more products for their home loans are given higher scores.
Fees
Fees can add up fast. Companies that don’t require as many fees for your home loan receive a higher score with us.
Reviewed by
Angelica Leicht
EditorAngelica Leicht is a writer and editor who specializes in everything mortgage-related for The Simple Dollar. Her work has spanned topics that include lending product reviews, interest rate trends, racial biases in mortgage lending and the role of fintech in lending practices, and has appeared in publications such as Interest, Bankrate, The Spruce, Houston Press and VeryWell, among others.
