The Rules for Financing an Investment Property Are Different. Here's What Florida Investors Need to Know.

Financing an investment property isn't the same as financing the home you live in. The loan terms are different, the requirements are stricter, and the pricing reflects the additional risk a lender takes on when the borrower isn't living in the property. Here's how it works in Florida and what investors need to plan for before they apply.

Down Payment Requirements

Investment properties require a minimum 15 percent down for single-family homes and 25 percent down for multi-unit properties (2 to 4 units) under conventional guidelines. That's significantly more than the 3 to 5 percent available for primary residences.

There's no government loan program (FHA, VA, or USDA) that allows investment property purchases unless you're buying a multi-unit property and living in one of the units. An owner-occupied duplex can be financed with FHA at 3.5 percent down. A duplex you're renting out entirely requires conventional investment property terms.

Rate Adjustments for Investment Properties

Expect rates on investment property loans to run 0.5 to 1.5 percentage points higher than primary residence rates, depending on your credit score and down payment. A borrower with a 740 score and 25 percent down will get meaningfully better pricing than one at 680 with 15 percent down.

Loan-level price adjustments (LLPAs) from Fannie Mae specifically hit investment property loans harder. These are fee grids that translate into rate increases or origination points. Your lender should show you the pricing impact of increasing your down payment or score. The difference between 15 percent and 25 percent down is often meaningful.

Reserve Requirements

Investment property loans require reserves, liquid assets the lender wants confirmed so they know you can sustain mortgage payments if the property goes vacant. The standard is two to six months of mortgage payments (PITIA: principal, interest, taxes, insurance, and association dues) per financed investment property.

If you own multiple financed investment properties, reserves stack. Buying your third rental with four others already financed means reserves are calculated across all properties. This is where investors sometimes get surprised mid-underwrite, so it's worth running the numbers before you're in contract.

Using Rental Income to Qualify

Projected rental income from the investment property can often be used to qualify. Most lenders allow 75 percent of the gross rent, accounting for vacancy and expenses,to count toward your income for qualifying purposes. If the property rents for $2,000 per month, $1,500 counts as qualifying income.

You'll need documentation to support the rental income figure. A market rent schedule from the appraiser or existing lease agreements are the standard sources. For a deeper look at how rate adjustments work at different credit tiers, see our guide to how LLPAs affect mortgage rates.

DSCR Loans for Florida Investors

DSCR loans are non-QM investment property products that underwrite based on the property's cash flow rather than the borrower's personal income. If the property generates rent equal to or greater than 1.0 to 1.25 times the monthly mortgage payment, the loan qualifies. This is particularly useful for investors who have significant deductions on their tax returns.

Florida is one of the strongest DSCR markets in the country due to vacation rental demand in Tampa, Orlando, and South Florida. For a full breakdown of how these products work, read our DSCR loan guide. Investors who own properties through an LLC should also review the LLC conventional mortgage guide; entity structure affects how lenders underwrite your file.

At 14 Days To Close, we work with real estate investors on conventional investment property loans, DSCR products, and portfolio financing. Give us a call or start your investor pre-approval at the link below.