A Guide To Investment Property Interest Rates

Real estate investing can be a lucrative business, but understanding the ins-and-outs of investment real estate loans rates is one major key to maximizing your overall profit. One of the most significant factors in making real estate investments profitable is the mortgage rate utilized to finance the property. This article will take a look at the current state of investment property mortgage rates, what influences them, and how to obtain good financing.

Current Investment Property Mortgage Rates

In 2025, the average 30-year fixed mortgage interest rate is around 6.84%. Mortgage rates for investment properties are much higher compared to mortgage rates for primary residences. This is because lenders see investment property as riskier opportunities because they have the potential to be unoccupied, which is risky because rental income will be the main avenue to pay off the loan. Investment property mortgage rates are between 0.5% and 1% higher than mortgage rates for owner-occupied homes, according to Bankrate.

Below are some examples of current mortgage rates for investment properties from major financial institutions.

Chase Bank

Chase offers fixed and adjustable-rate loans for investment properties, with down payments starting at 15%, depending on loan size, property type, and credit score.

Bank of America

Bank of America offers fixed-rate mortgages with rates varying based on loan amount, credit score, and down payment.

PNC Bank

PNC offers mortgage products suitable for investment properties. Specific rates depend on individual qualifications and loan specifics. Consult them directly for specific rates. T heir 30-year fixed rate for primary residences is advertised at 6.875% APR. For investment properties, expect rates to range from approximately 7.375% to 7.875%.

Factors Influencing Investment Property Mortgage Rates

Now that we know what the standard interest rate looks like in 2025, let's consider what influences these investment loan rates. Several factors are involved when determining investment property mortgage rates.

Credit Score

The higher the credit score, the lower the investment property interest rates. Good creditors are considered less risky for lenders, and therefore they receive more favorable terms.

Down Payment

Lenders typically require a larger down payment for investment property, between 15% to 30%. A large down payment reduces the risk of the lender and could lead to attractive interest rates.

Debt-to-Income Ratio (DTI)

The more favorable the DTI, the better the borrower's capacity to service monthly debt, making them more favorable options to lenders.

Loan-to-Value Ratio (LTV)

A lower LTV, achieved through a higher down payment, is less risk for the lender and can result in improved rates.

Property Location and Type

Properties that are multi-unit or in less desirable locations can have higher interest rates because they are perceived as being a higher risk investment.

Comparing Investment Mortgage Rates to Primary Residence Rates

Investment mortgage interest rates are higher than rates for primary residences, and for good reason. In calculating mortgage risk, lenders estimate the likelihood that the borrower will pay first. Borrowers in owner-occupied homes will be more inclined to pay on time to avoid losing their primary residence. Investment homes are secondary obligations, however, making them riskier to the lender.

As a result, investment mortgage rates are usually 0.5% to 1.0% higher than for a primary residence, as stated before. For example, while a very creditworthy borrower may qualify for a 6.5% interest rate on a 30-year fixed mortgage for the primary residence, the same borrower would probably pay 7.0% to 7.5% on an investment property loan.

This premium rate recognizes the risk of many things, such as:

1. Vacancies, which sever cash flows and increase default risk.
2. Tenant non-payment, which can hurt the property's income stream.
3. Maintenance problems, which may be more prevalent in older or multi-unit investment properties.
4. Market fluctuation, as rental demand and rental property values may fluctuate more erratically.

Lenders also usually charge Loan-Level Price Adjustments (LLPAs) for investment property loans, which are fees that specifically impact the interest rate. Fannie Mae and Freddie Mac both charge LLPAs charging more on non-owner-occupied properties, especially when credit is 780 or lower.

These extra fees and stricter underwriting standards account for why investment property interest rates are always higher, even for well-qualified borrowers. Knowing this disparity allows investors to prepare financially and structure transactions with realistic cash flow projections.

How to Achieve Favorable Investment Loan Rates

While investment loan rates are above what would be needed for a single-family residence, you can still take proactive steps to lower your borrowing costs. Obtaining a lower rate not only saves money over the life of the loan, but also boosts monthly cash flow, improving long-term returns. Below are several steps you can take to lower your rate:

1. Improve Your Credit Score

The lowest rates are given to borrowers with pristine credit by lenders. Aim for a credit score of 740 or higher to get lower investment mortgage rates. Check your credit report frequently for mistakes, make payments on time, and reduce the balances on credit cards. Even an improvement of 20–30 points in your score will result in savings on your loan.

1. Put Down More Money

Putting more money on a down payment lowers the loan-to-value ratio, which straightaway reduces lender risk. Most lenders prefer a minimum of 15-25% down on investment property, but paying more than the absolute minimum can give negotiating leverage to demand a reduced interest rate or close with closing costs eliminated. A higher down payment may also allow you to eliminate private mortgage insurance altogether.property, but paying more than the absolute minimum can give negotiating leverage to demand a reduced interest rate or close with closing costs eliminated. A higher down payment may also allow you to eliminate private mortgage insurance altogether.

1. Reduce Your Debt-to-Income (DTI) Ratio

The DTI ratio is your total monthly debt payments divided by your gross monthly income. Lenders prefer to see a DTI of below 36% for investment property loans. Pay off high-interest debt, avoid new credit charges, and seek to increase your income prior to applying in an effort to decrease this ratio. A lower DTI shows greater financial stability and can result in more favorable loan terms.

1. Shop Around with Multiple Lenders

Don't take the first quote that you get. Get loan quotes from multiple lenders, including national banks, credit unions in your area, online lenders, and mortgage brokers. Each lender will assess risk differently, and you may find that one is more suited to your financial situation or property type. Comparing quotes will help ensure that you're not leaving money on the table.

1. Consider Alternative Loan Types

Not all loans are created equally, and there are some products that are created with the needs of real estate investors in mind. Some of those include:

• Typical Loans: Great for credit-worthy borrowers with good down payments
• Portfolio Loans: Held on by the lenders and have more flexible terms
• DSCR Loans (Debt-Service Coverage Ratio): Ideal for investors with complex finances or more than one asset. These loans evaluate the income of the property, not your own income
• FHA or VA Loans (for 2- to 4-unit owner-occupied buildings): If you plan to occupy one of the units, these government-insured loans can offer low down payments

Choosing the correct type of loan for your investment method is the key to securing the highest rate and long-term success.

Final Thoughts

As investment property interest rates are inherently likely to be higher due to heightened risk factors, smart investors will try to minimize the cost of borrowing by enhancing their credit scores, making bigger down payments, and choosing the right type of loan. Being strategic and thoughtful about your financing terms will help you assess the current loan rates today.