DSCR loans, bridge loans, fix-and-flip, construction, seller financing, and more
Buying the right property is only half the equation. This guide compares every major financing option available to real estate investors — what each one costs, when it makes sense, and which strategy it fits.
The biggest mistake I see new investors make is choosing a loan product before they understand the deal. The right order is:
Does this investment make sense?
Model cash flow, cap rate, DSCR, IRR. If the numbers don't work, no financing structure fixes it.
Analyze in DealForgeWhat will it actually cost to build?
For developments, infrastructure and construction costs usually matter more than the financing rate.
Estimate in BuildGradeWhich financing fits this project?
Only after the deal pencils do you compare loan products. That's what this guide covers.
Explore financing options ↓Use this as a starting point. Click the calculator link to model your specific deal numbers.
| Investment Strategy | Primary Financing | Alternative | Calculator |
|---|---|---|---|
| Long-Term Rental | Conventional / DSCR | Portfolio | Run numbers |
| Airbnb / STR | DSCR | Conventional | Run numbers |
| Mid-Term Rental | DSCR / Conventional | Portfolio | Run numbers |
| BRRRR | Bridge → DSCR Refi | Private Money | Run numbers |
| Fix & Flip | Fix & Flip / Bridge | Private Money | Run numbers |
| Small Multifamily | Conventional / DSCR | Portfolio | Run numbers |
| Ground-Up Development | Construction | SBA (if owner-op) | Run numbers |
| Self-Storage | Construction / Commercial | SBA | Run numbers |
| RV Park | Construction / Commercial | SBA | Run numbers |
| Car Wash | SBA 7(a) | Conventional | Run numbers |
| Laundromat | SBA 7(a) | Seller Financing | Run numbers |
| Business Acquisition | SBA 7(a) / Seller Financing | Private Money | Run numbers |
Each financing type below is designed for specific investment strategies. Rates and terms reflect 2026 market conditions and vary by lender, property type, and borrower profile.
No single financing option is “best.”
The right loan depends on your investment strategy, timeline, leverage, cash reserves, and exit plan. The goal isn't to find the cheapest interest rate — it's to find the financing that best supports the investment.
Qualify on property income, not personal income
Debt Service Coverage Ratio loans have become the dominant financing tool for rental property investors. The property's income — not your tax returns — is the primary underwriting factor. Minimum DSCRs as low as 1.0 exist, though rates improve significantly at 1.20+.
Rate Range
7.0 – 8.5%
Typical LTV
75 – 80%
Loan Term
30-year fixed
Best For
Pros
Cons
Short-term capital when speed and flexibility matter
Bridge loans are designed for situations where permanent financing isn't yet available — acquiring distressed properties, funding value-add renovations, or spanning the gap between purchase and a stabilized refinance. BRRRR investors rely on them heavily. Underwriting focuses on the property's ARV and the borrower's exit strategy, not DSCR.
Rate Range
9.0 – 12.0%
Typical LTV
70 – 80% of ARV
Loan Term
6 – 24 months
Best For
Pros
Cons
Acquisition + rehab in a single short-term loan
Fix-and-flip loans bundle the acquisition and renovation budget into one instrument. Funds are released at closing for purchase, then drawn in stages as construction milestones are reached. Underwriting centers on ARV and project timeline. Most experienced lenders approve deals in under two weeks.
Rate Range
10.0 – 14.0%
Typical LTV
75 – 85% of ARV
Loan Term
6 – 18 months
Best For
Pros
Cons
The seller becomes the lender — with highly negotiable terms
Owner financing removes the bank entirely. The buyer makes payments directly to the seller on negotiated terms. Down payment, rate, amortization, balloon payment, and repayment structure are all on the table. It can create opportunities that traditional lenders won't touch — but the legal structure matters enormously. Not all seller financing is equal.
Rate Range
Negotiated (often 5–8%)
Typical LTV
Flexible (10–30% down)
Loan Term
Negotiated (often 5–30 yr with balloon)
Best For
Pros
Cons
Ground-up development requires a different financing structure
Construction loans fund ground-up projects through a draw schedule tied to construction milestones, then convert to (or get replaced by) permanent financing at stabilization. Unlike acquisition loans, the lender is funding something that doesn't exist yet — which demands detailed plans, cost budgets, and contractor qualifications. Delays cost real money because interest accrues on outstanding draws.
Rate Range
8.0 – 11.0%
Typical LTV
65 – 75% of project cost
Loan Term
12 – 24 months (construction)
Best For
Pros
Cons
The lowest rates — for investors who qualify
Conventional loans remain the lowest-rate option for investors who can meet the underwriting requirements: strong credit, full income documentation, and debt-to-income ratios within guidelines. They work best for stabilized buy-and-hold rentals at lower leverage. The Fannie/Freddie 10-property cap limits scalability, which pushes high-volume investors toward DSCR and portfolio products.
Rate Range
6.5 – 7.5%
Typical LTV
75 – 80%
Loan Term
15 or 30-year fixed
Best For
Pros
Cons
When the investment includes an operating business
SBA 7(a) and 504 loans serve investor-operators rather than purely passive investors. They fit best when a real estate acquisition comes with an operating business component — laundromats, car washes, motels, hotels. The process is longer than conventional financing, but SBA loans can offer attractive terms, especially for business-heavy acquisitions where the operational income drives value.
Rate Range
7.0 – 10.0%
Typical LTV
80 – 90% (with SBA guarantee)
Loan Term
10 – 25 years
Best For
Pros
Cons
Turn existing equity into new investment capital
Many investors fund their first or second investment property using equity from a primary residence or existing rental. A HELOC provides a revolving line of credit. A cash-out refinance provides a lump sum at a fixed rate. Both accelerate portfolio growth — and both increase total leverage, which requires careful modeling of the combined cash flow picture.
Rate Range
HELOC: Prime + 0.5–2%; Refi: 7–8%
Typical LTV
Up to 80–85% CLTV
Loan Term
HELOC: 10yr draw / 20yr repayment
Best For
Pros
Cons
Lender keeps the loan — which means more flexibility
Portfolio lenders originate and hold loans rather than selling them to Fannie Mae or Freddie Mac. Because they aren't bound by agency guidelines, they can write loans conventional lenders won't: more than 10 properties, unique asset types, cross-collateralization across multiple properties. Most portfolio lenders are community banks, credit unions, or regional banks with local market knowledge.
Rate Range
7.0 – 9.0%
Typical LTV
65 – 75%
Loan Term
5 – 30 years (varies)
Best For
Pros
Cons
Relationship-based capital from individual investors
Private money comes from individuals rather than institutions — friends, family, local investors, or private lending groups. The terms are negotiated between parties, which can produce highly creative structures. Because private lenders aren't regulated like banks, documentation is even more critical: clear promissory notes, recorded mortgages, and attorney-reviewed agreements protect both parties.
Rate Range
Negotiated (8–14%)
Typical LTV
Varies widely
Loan Term
6 months – 5 years
Best For
Pros
Cons
Assume an existing loan — sometimes at a below-market rate
An assumable mortgage allows a qualified buyer to take over the seller's existing loan, including its original interest rate. In periods of elevated rates, this can represent one of the most attractive financing structures available — inheriting a 3–4% rate when new loans are at 7%+ is significant. FHA and VA loans are assumable by statute. Conventional loans generally aren't. The availability is limited, but when it aligns, the economics are compelling.
Rate Range
Seller's existing rate (varies)
Typical LTV
Remaining loan balance only
Loan Term
Remainder of seller's term
Best For
Pros
Cons
Understanding the deal mechanics comes before comparing loan products. These calculators help you model the investment, then DealForge stress-tests it.
DSCR loans and conventional investment property loans are the two most common options. Conventional loans offer the lowest rates but require full income documentation and have a 10-property limit. DSCR loans qualify on the property's income rather than personal income, which makes them better for self-employed investors and those scaling beyond 10 properties.
Most house flippers use fix-and-flip loans (also called hard money or bridge loans) that bundle the acquisition cost and rehab budget into a single short-term loan. These close quickly, underwrite on ARV, and fund construction draws — but carry interest rates of 10–14% annually, which makes hold period discipline critical to preserving margin.
Yes. DSCR loans (Debt Service Coverage Ratio loans) qualify primarily on whether the property's rental income covers the mortgage payment — not on personal income or tax returns. This makes them popular with self-employed investors, those with complex income, and anyone who has hit conventional lending limits.
A DSCR loan qualifies based on the property's Debt Service Coverage Ratio: NOI ÷ Annual Debt Service. A DSCR of 1.25 means the property earns 25% more than the mortgage payment. Most DSCR lenders require a minimum of 1.0–1.20. The property's income is the underwriting basis, not the borrower's W-2 or Schedule C.
The terms are often used interchangeably. Both are short-term, asset-based loans that focus on property value (ARV) rather than borrower income. "Hard money" is the traditional term for private/non-institutional short-term lending. "Bridge loan" is more commonly used by institutional lenders offering similar products. The mechanics are similar — rates, LTV, draw schedules — but institutional bridge lenders tend to have more transparent underwriting and slightly lower rates.
A BRRRR deal typically uses two financing phases: a short-term bridge or hard money loan for acquisition and rehab, then a cash-out DSCR refinance after the property is renovated and stabilized. The bridge loan funds fast and underwrites on ARV; the DSCR refi provides long-term debt service based on stabilized rental income. Some lenders offer bridge-to-rental programs that cover both phases.