At Global Florida Realty, we understand that investors are always on the lookout for the best mortgage rates.
If you’re wondering, “What are current mortgage rates for investment properties?” you’ve come to the right place.
In this post, we’ll explore the latest trends in investment property financing and provide insights to help you secure the most favorable terms.
Current Investment Property Mortgage Rates
Today’s Rates for Investment Properties
Investment property mortgage rates are generally higher than mortgage rates on primary residences or second homes. As of May 14, 2025, this trend continues to hold true in the real estate market.
Understanding Higher Investment Property Rates
Lenders perceive investment properties as higher-risk ventures. In financial hardships, borrowers often prioritize payments on their primary residence over an investment property. This increased risk translates to higher interest rates for investors.
Key Factors Influencing Investment Property Rates
Several elements impact the rates offered to investors:
- Credit Score: Higher scores lead to better rates. Try to achieve a score of at least 740 for optimal terms.
- Down Payment: Larger down payments often result in lower rates. While 20% is standard, 25% or more can significantly improve your rate.
- Debt-to-Income Ratio (DTI): Maintain your DTI below 36% for the most favorable rates.
- Property Type: Single-family homes typically secure better rates than multi-unit properties.
- Loan-to-Value Ratio (LTV): A lower LTV ratio often leads to better rates. Strive to keep it under 75%.
Strategies to Secure Competitive Rates
To obtain the most competitive rates, consider these strategies:
- Work with a knowledgeable real estate professional (Global Florida Realty offers nearly 30 years of expertise in Florida real estate).
- Understand current market conditions (rates can fluctuate based on economic factors).
- Connect with multiple lenders (comparison shopping can yield better terms).
- Analyze the overall cost of the loan, including fees and closing costs (don’t focus solely on the interest rate).
The Role of Property Management in Rate Determination
Effective property management can influence the rates you receive. Lenders often view well-managed properties as lower-risk investments. Consider professional property management services (such as those offered by Global Florida Realty) to potentially secure more favorable rates.
As we move forward, let’s explore the various types of investment property mortgages available to investors in today’s market.
Investment Property Mortgage Options
Conventional Loans for Investors
Conventional loans stand out as a popular choice for investment properties. These loans typically require a down payment of 15-25%, depending on the property type. Interest rates usually exceed those for primary residences by 0.5-0.75%. For instance, if primary residence rates hit 6%, investment property rates might range from 6.5-6.75%.
To qualify, you need a credit score of at least 620, though 680 or higher improves your chances for better rates. Your debt-to-income ratio should not exceed 45%. Keep in mind that conventional loans often cap the number of financed properties at 10.
Government-Backed Options
FHA loans, while primarily for owner-occupied properties, offer a unique opportunity for investors. The FHA allows financing for multi-unit properties (up to four units) if the borrower lives in one unit. This option can jumpstart your investment portfolio while securing your own housing.
VA loans, though not available for pure investment properties, can be used similarly to FHA loans for multi-unit properties if the veteran occupies one unit.
Commercial Real Estate Financing
For larger investments or properties with more than four units, commercial real estate loans become the primary option. These loans typically feature higher interest rates, shorter terms (5-20 years), and require larger down payments (20-30%). However, they often have more flexible qualifying criteria, focusing more on the property’s potential income rather than the borrower’s personal finances.
Commercial loans suit experienced investors looking to expand their portfolios significantly. As of June 20, 2025, multifamily loan rates for properties over $6 million are around 5.45%, while rates for properties under $6 million are about 5.91%, both with up to 80% loan-to-value ratios.
Short-Term Financing Alternatives
Investors aiming to quickly purchase, renovate, and sell properties might benefit from short-term financing options like hard money loans. These loans typically have interest rates ranging from 9.5% to 15%, with origination fees usually between 1% and 3% of the loan amount.
Bridge loans present another option, helping investors purchase a new property before selling an existing one. These typically have terms of 6-12 months and interest rates ranging from 6-10%.
As you explore these various mortgage options, consider consulting with a reputable real estate agency (such as Global Florida Realty) to guide you towards the financing solution that best fits your investment strategy and goals. The next section will discuss strategies to secure the most competitive rates for your investment property mortgage.
Securing the Best Investment Property Mortgage Rates
Improve Your Credit Score
Your credit score plays a pivotal role in determining the interest rates lenders offer. To enhance your score:
- Pay all your bills on time
- Reduce your credit card balances
- Ask for a credit limit increase
- Avoid new credit applications before seeking a mortgage
- Check your credit reports and scores
Increase Your Down Payment
A larger down payment often results in better interest rates. While 20% is common, consider putting down 25% or more. This reduces the lender’s risk and can lead to a rate reduction of 0.25% to 0.5%. For a $300,000 property, increasing your down payment from 20% to 25% could save you thousands over the loan’s lifetime.
Compare Multiple Lenders
Don’t accept the first offer you receive. Investment property loans generally have higher mortgage rates compared to loans for primary residences. Use this information to negotiate with lenders. Many will match or beat competitors’ offers to win your business.
Consider Adjustable-Rate Mortgages
While fixed-rate mortgages are popular, adjustable-rate mortgages (ARMs) can offer lower initial rates. A 5/1 ARM might start 0.5% to 0.75% lower than a 30-year fixed rate. This can benefit you if you plan to sell or refinance within a few years. However, prepare for potential rate increases after the initial fixed period.
Work with a Mortgage Broker
A skilled mortgage broker can access a wide range of lenders and loan products, potentially uncovering options you might overlook on your own. They can also help navigate complex lending requirements for investment properties. While brokers typically charge a fee (usually 1-2% of the loan amount), the savings from a lower interest rate often exceed this cost.
Final Thoughts
Investment property mortgage rates typically exceed standard mortgage rates by 0.5% to 0.75%. This premium reflects the increased risk lenders associate with investment properties. Investors who want to secure favorable terms should improve their credit scores, increase down payments, and compare offers from multiple lenders.
The question “What are current mortgage rates for investment properties?” doesn’t have a single answer. Rates vary based on your financial profile, property type, and market conditions. Thorough research and comparison are essential when seeking the best mortgage rates for investment properties.
Global Florida Realty can guide you through the complexities of investment property financing. Our team can help you navigate market conditions and connect you with lenders offering competitive rates. You can position yourself to secure favorable rates for your investment property ventures with the right knowledge and resources.