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Are you looking to buy a property to sell or rent? You'll want to know all your options for financing your investment so you can make the most profitable decision.
This guide explores the top financing options available for property investments across the U.S.
Hard Money Loans
For situations where you need fast access to funding, hard money loans are the best option.
Hard money lenders offer financing based on your project rather than focusing on your credit score, and they tend to approve loan applications within a matter of days (rather than the week- or month-long approval process for banks).
This lending option is excellent if you're looking to find something quickly, like a hot property at an auction, and you can't wait for a bank loan.
Conventional Mortgages
If you're not in a rush to secure financing for your project, the most popular option is to get a conventional mortgage from a bank.
To successfully apply for a mortgage, you'll typically need to have a high credit score and be able to make a substantial down payment (up to 25%, sometimes even more).
When you're getting a mortgage for an investment property, the interest will be higher than when you're buying for personal use due to the higher risk involved. You'll usually be able to choose between a few different mortgage options, including fixed-rate and adjustable-rate mortgages.
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Private Money Loans
Private money loans work much like hard money loans, but they're funded by individual investors instead of traditional lending institutions. This can give you more flexibility (and a better deal) regarding loan terms, but the exact terms will differ for each lender.
Most investors only consider private money loans if they have a personal relationship with the lender. Still, you may also find local money lenders in your area or online—just be sure to thoroughly vet any lender before proceeding to ensure legitimacy and fair terms.
Home Equity Loans and HELOCs
Finally, you'll want to consider home equity loans and home equity lines of credit (HELOCs) if you will use equity from an existing property to finance your next investment.
With a home equity loan, you receive a lump sum upfront at a fixed interest rate and repay it over a predetermined schedule. HELOCs are a bit different—they have variable interest rates and act as revolving credit lines, so you can access funds as needed within a set period.
Another way to tap existing equity is a reverse mortgage on your primary residence. For eligible homeowners, an FHA-insured HECM can convert equity into cash via a lump sum, monthly payments, or a line of credit typically without required monthly mortgage payments. With mandatory HUD counseling, non-recourse protections, and safeguards for non-borrowing spouses, it can be a strategic way to free up capital for a new investment while keeping your current home. Explore how reverse mortgages work, eligibility, fees, and safeguards to decide if this option complements or compares favorably with a HELOC.
Final Word
You don't need us to tell you the benefits of investing in real estate, but the financing option you choose will make a big difference in your profits and the smoothness of your project.
At least one of these financing options should suit you, but don't stop once you've made your choice. You'll want to shop around and find a lender with the best funding for your specific situation, with no hidden small print.
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