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Current investment property rates

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What is an investment property?

Buying an investment property — also called an income property or rental property — is one of many strategies that can generate income and long-term wealth. As the name implies, an investment property exists to produce rental income, either from short-term rentals or on an annual lease. It might also offer appreciation when sold, if its value has substantially increased over time.

As with any investment, there are risks to buying and owning this type of property, and the requirements to finance one are somewhat different compared to that of a primary residence.

Investment properties vs. second homes

It’s not always easy to say if a house is an investment property or a second home. Earning some money from your property doesn’t automatically make it an investment. One distinction hinges on how much time you spend in the property. The 14-day limit is a key rule of thumb. If you personally live in the property for two weeks or less, it probably can be classified as an investment. But if you spend more than 14 days in the house, it’s a second home. The answer matters when you apply for a mortgage. That’s because second home borrowers face lower requirements around credit scores and down payments than investors do.

Are interest rates higher for investment property loans?

Investment property loan rates are almost always higher than conventional loan rates, including second home loan rates, due to the steeper risk an investment property poses compared to a primary residence. If you plan to rely on the rental income from a tenant to contribute to (or cover) the mortgage payments for the investment property, there’s a greater possibility you could default on the loan if your tenant fails to pay rent.

How to get the best investment property loan rate

There are a few ways to ensure you get the best possible mortgage rate on an investment property loan:

Pros and cons of investment property loans


  • You can borrow more compared to a conventional loan. Loan limits often range well above $1 million.
  • You don’t have to live in the property. In fact, that’s the definition of an investment.
  • Real estate investment comes with many tax benefits: You can deduct interest as a rental expense, and also deduct for depreciation.


  • You’ll have a higher interest rate compared to a conventional loan. This reflects the additional risk that lenders perceive with investment properties.
  • You’ll need to meet stricter underwriting requirements. For instance, lenders will impose higher standards for down payments and credit scores.

Investment property FAQs