8 Types of Investment Property Loans you Should Know About

Investing in real estate is one of the smartest ways to build long-term wealth, but choosing the right financing can make or break your success. With so many loan options available, investors often feel confused about which investment property loan fits their strategy. Whether you’re buying a rental home, flipping a property, or expanding a real estate portfolio, understanding loan types is essential.

At Colene Stovall, we help investors simplify real estate financing by matching them with the right loan solution based on their goals, location, and experience. This guide explains the 8 most important types of investment property loans every real estate investor should know about—clearly, simply, and practically.

Here are the 8 most important types of investment property loans

1. Conventional Investment Property Loans

Conventional loans are offered by banks and credit unions and are commonly used for investment properties. These loans typically require a higher credit score and a larger down payment compared to primary residence loans.

They are best suited for experienced investors with strong financial profiles who plan to hold properties long-term. Interest rates are competitive, but qualification standards can be strict.

Best for: Buy-and-hold investors with good credit
Down payment: Usually 20–25%

2. Hard Money Loans

Hard money loans are short-term, asset-based loans often used for quick property purchases. Approval is based mainly on the property’s value rather than the borrower’s credit score.

These loans are popular for house flippers because they fund fast and are flexible. Investors frequently use Fix and Flip Loans Services in New Braunfels Tx to renovate properties quickly and sell them for profit.

Best for: Fix-and-flip projects
Loan term: 6–24 months

3. Private Money Loans

Private money loans come from individuals or private lenders rather than banks. These loans are more flexible and faster to close, making them ideal for investors who need quick funding.

Many investors rely on Private Money Lenders for Real Estate in San Antonio Tx because they offer customized terms and fewer qualification hurdles. Similarly, Private Money Loans for Investors in Austin Tx are widely used in competitive markets where speed matters.

Best for: Investors needing flexible terms
Approval speed: Very fast

4. FHA Loans for Investment (House Hacking)

Although FHA loans are designed for primary residences, investors can use them strategically through house hacking—living in one unit while renting out others in a multi-family property.

This option allows new investors to enter real estate with a low down payment and build equity while tenants help cover the mortgage.

Best for: Beginner investors
Down payment: As low as 3.5%

5. Portfolio Loans

Portfolio loans are held by lenders instead of being sold to secondary markets. Because of this, lenders can set their own rules, making these loans more flexible.

They are ideal for investors who own multiple properties and may not qualify for conventional loans due to strict lending limits.

Best for: Investors with multiple properties
Flexibility: High

6. Commercial Real Estate Loans

Commercial loans are used for properties with five or more units or for mixed-use buildings. These loans focus more on the income generated by the property rather than the borrower’s personal finances.

Investors seeking Real Estate Investment Loans in Houston Tx often use commercial financing to scale their portfolios and invest in apartment complexes or retail spaces.

Best for: Large-scale investors
Loan terms: 5–20 years

7. DSCR (Debt Service Coverage Ratio) Loans

DSCR loans are designed specifically for real estate investors. Approval is based on whether the property’s rental income can cover the mortgage payments.

This is a powerful option for investors who want to grow quickly without relying heavily on personal income documentation.

Best for: Rental property investors
Key factor: Rental cash flow

8. Bridge Loans

Bridge loans are short-term loans that help investors “bridge” the gap between buying a new property and securing long-term financing or selling an existing one.

These loans are commonly used when timing is critical, such as auction purchases or quick acquisitions in hot markets.

Best for: Time-sensitive deals
Loan duration: Short-term

Quick Comparison Table of Investment Property Loans

Why Choosing the Right Loan Matters

Selecting the right investment property loan impacts your:

• Cash flow

• Profit margins

• Risk exposure

• Ability to scale

At Colene Stovall, we focus on aligning your investment strategy with financing that supports long-term success. Whether you’re working with Private Money Lenders for Real Estate in San Antonio Tx or exploring Fix and Flip Loans Services in New Braunfels Tx, the right loan can unlock better returns.

FAQs

What is the best loan for investment property?

The best loan depends on your strategy. Rental investors often prefer DSCR or conventional loans, while flippers use hard money or private loans.

Can I get an investment property loan with bad credit?

Yes. Hard money and private loans focus more on property value than credit score.

Are private money loans risky?

They can be if the terms aren’t clear. Working with trusted providers like Colene Stovall reduces risk significantly.

Which loan is best for fix and flip projects?

Hard money and Fix and Flip Loans Services in New Braunfels Tx are ideal due to fast funding and short terms.

How fast can I close an investment loan?

Private and hard money loans can close in as little as 7–14 days.

Final Thoughts & Helpful Hints

• Always match your loan type to your investment goal

• Short-term projects need fast, flexible financing

• Long-term rentals benefit from lower interest rates

• Cash flow analysis is more important than the interest rate alone

• Work with experienced professionals like Colene Stovall to avoid costly mistakes

Hint for Investors:
Before choosing a loan, calculate your exit strategy first. The smartest investors don’t just buy properties—they finance them wisely.