A mortgage on a rental is a different product from the one on your home: higher rates, bigger down payments, and more scrutiny of the property's income. Knowing the landscape before you shop keeps a lender's first quote from becoming your anchor.
What's different about investor loans
Expect rates 0.5–0.875% above owner-occupied quotes; most lenders require a down payment of 20–25% (75–80% LTV). Lenders price the extra risk of a borrower who can walk away without losing their own roof. Reserves matter too: many lenders want to see 3–6 months of payments in the bank per financed property.
The main loan types
Conventional (conforming) loans work for 1–4 unit properties and qualify you on personal income plus a portion of the rent; most investors start here. DSCR loans qualify on the property's income alone — handy once your personal debt-to-income is maxed, at a rate premium. Commercial/portfolio loans cover 5+ units and LLC borrowers, often with 20–25 year amortizations and 5–10 year balloon terms. Hard money is short-term, expensive (10%+), and only for deals with a fast exit.
Fixed vs adjustable, term and structure
A 30-year fixed maximizes cash flow and rate certainty; a 15-year builds equity faster at a higher payment. Adjustable and balloon structures carry reset risk — fine if you plan to sell or refinance first, dangerous if "plan" is the only protection. Ask every lender the same four numbers: rate, points, amortization, and any balloon date.
Worked example
A $250,000 duplex, 25% down: $187,500 loan. At 6.75% on a 30-year fixed, the payment is about $1,216/month before taxes and insurance. The same loan on a 15-year at 6.25% runs about $1,608 — $392 more per month, but it retires the debt in half the time. If the duplex nets $1,500/month before debt, only the 30-year leaves real monthly cushion.
When this rule of thumb breaks
Loan menus shift with the credit cycle — down-payment minimums, reserve rules, and DSCR pricing all tighten when markets wobble, so a quote from six months ago is stale. Small local banks and credit unions often beat national pricing for portfolio landlords but keep loans on their own books with quirkier terms. And the cheapest rate isn't always the best loan: a balloon that matures in a frozen credit market can cost you the building. Have a lender walk you through total cost over your expected hold.