Down payment for an investment property

Member since 2025 · 19 posts · 17 votes

I am wanting to purchase an investment property but am running into a speed bump. I've qualified for a DCSR loan but having trouble finding the down payment. I already have a HELOC on our personal property that was used for renovations. Is there any other financial vehicle I could use to get the 20%? Any advice or options is helpful.

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Clayton Silva

Lender · CA · Member since 2018 · 637 posts · 393 votes

8mo

Honestly, the only way I have seen less down for investment stuff is buying a fixer upper on a low down payment fix and flip loan (10-15% down) and rehabbing it and then doing a refinance on the backend to keep it as a rental. Outside of that, bring on a co borrower with cash, or continue saving for the down payment and reserves.

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Clayton Silva
Lender · CA · Member since 2018 · 637 posts · 393 votes
8mo
Honestly, the only way I have seen less down for investment stuff is buying a fixer upper on a low down payment fix and flip loan (10-15% down) and rehabbing it and then doing a refinance on the backend to keep it as a rental. Outside of that, bring on a co borrower with cash, or continue saving for the down payment and reserves.
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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
8mo
Quote from @Matt Settle:

I am wanting to purchase an investment property but am running into a speed bump. I've qualified for a DCSR loan but having trouble finding the down payment. I already have a HELOC on our personal property that was used for renovations. Is there any other financial vehicle I could use to get the 20%? Any advice or options is helpful.

I think it will be better in the long run to save more money before you buy a rental. Buying a rental property is a lot more expensive than just the downpayment. You should also consider, maintenance, repairs, reserves, and closing costs. They all add up.
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Cam SchwartzBusiness Member
Lender · Chicago, IL · Member since 2024 · 102 posts · 48 votes
8mo
Quote from @Matt Settle:

I am wanting to purchase an investment property but am running into a speed bump. I've qualified for a DCSR loan but having trouble finding the down payment. I already have a HELOC on our personal property that was used for renovations. Is there any other financial vehicle I could use to get the 20%? Any advice or options is helpful.

Hi @Matt Settle, you're asking in the right place.
This is tricky. DSCR loans, including ours, typically have seasoning requirements where your funds for the downpayment must be sitting in an account for a period of time, often 90-180 days. One potential workaround is to structure as a bridge loan where your down payment might be reduced to 10-15% without seasoning requirements (source of down payment funds can come from HELOC or other sources). These loans however are short term (12-24 months) with higher interest payments (10%+) so this solution would only be temporary and you would need to refinance at some point. If you think you can add meaningful value to the property where this becomes a feasible BRRRR play then this alternative might make sense.

Hope this helps and best of luck!

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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
8mo
@Matt Settle
hi Matt. just to be blunt - even if you are able to borrow 100%, you will just lose money every month on the investment, as it won't be able to support all that debt.
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- Matt Settle
  OP
  Member since 2025 · 19 posts · 17 votes
  8mo
  Totally understand where you’re coming from. This property will be utilized by my family as well. Looking at all the numbers is it a great deal, maybe not. However, it will generate revenue that should cover operating expenses and mortgage. We have about 20k in savings and may just wait to save more to reach the 20%.
  
  Quote from @Nicholas L.:
  
  @Matt Settle
  hi Matt. just to be blunt - even if you are able to borrow 100%, you will just lose money every month on the investment, as it won't be able to support all that debt.
  
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Clayton Silva
Lender · CA · Member since 2018 · 637 posts · 393 votes
8mo
not necessarily true at all. If I buy a 300k house for 250k and the rent is 2k/month it could very well be cash flow positive with 250k in debt or 100% financing. If you short term rent it and get higher rents could be very lucrative even at today's rates with 100% financing.
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Nicholas L.Pro Member
Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
8mo
@Clayton Silva
as always... it depends on what you mean by cash flow positive. could the rent exceed the expenses by some amount, in a given month? sure. will you truly be cash flow positive in the short term if you actually count all of your expenses, like closing costs and rent ready costs? almost certainly not.
and, a brand new, undercapitalized investor borrowing 100%, without a team or a deal pipeline? that is high risk, period.
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Clayton Silva
Lender · CA · Member since 2018 · 637 posts · 393 votes
8mo
I am not endorsing or recommending this approach, the question was in regards to possibility. And I have seen exactly this scenario multiple times. Rate is only one tiny lever in real estate. Loan amount and LTV are another lever. Purchase price is a lever. Insurance and deductible is another lever. Tons of ways to make a deal work, if not price, then terms kind of deal.
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Arman AhmedPro Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 916 votes
8mo
@Matt Settle
Hey Matt, if you're short on the 20% down, some options to explore include: tapping other lines of credit, partnering with friends or family for a small JV, using a cash-out refinance on another property, or looking at properties that allow lower down payment programs like FHA (for house hacking) or portfolio loans from local banks. Also, some investors structure creative financing like seller financing or private money for part of the down payment. Always run the numbers conservatively to make sure the deal still cash flows.

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Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
8mo
@Matt Settle
You've already gotten some good answers. This is where if you can BRRRR projects and bring appreciation to the property then you can refinance and in theory have no down payment. The reality in today's economy, pulling all of your money out is challenging, but the plus side is that at the end of the day your down payment after it's all said and done might be 5% versus 20%.
Of course you need creative financing for this to start. I use private money, but you need enough spread to refinance your private lender out and have enough for a reduced down payment. It happens through the refinance portion.
If you bought a property discounted enough with private money and refinance later that might work as well. I always do some rehab to it, even if it’s small to push the value.
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Ryan RomingerBusiness Member
Real Estate Broker · Indianapolis, IN · Member since 2018 · 340 posts · 144 votes
8mo
That's a common hurdle. Beyond a HELOC, some investors look at cash-out refis, private money, or partnering on the first deal to bridge the equity gap, though each comes with tradeoffs. I'd also talk through options with a lender who works regularly with DSCR loans—sometimes there are structures or timing strategies that aren't obvious at first but can help you get there without overextending.
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Eric FernwoodBusiness Member
Realtor · Las Vegas, NV · Member since 2014 · 993 posts · 1k+ votes
8mo
Hello @Matt Settle,
You'll need more cash to buy a property than just the down payment. For example, here's an estimate of the cash required to buy a $400,000 property:
- Down payment at 20%: 20% × $400,000 = $80,000
- Closing costs at 3% (including budgeting for discount points): 3% × $400,000 = $12,000
- Renovation (guess): $20,000
Total cash required: $112,000

You also need a separate financial cushion for unexpected events. For example, when the 1997 financial crash hit while I was living in Singapore, everyone panicked as companies shut down and thousands of jobs were lost, it was a traumatic time to be in Southeast Asia. Because I had a significant cash reserve, I didn't panic. Instead, I put my furniture in storage and spent a year traveling through Southeast Asia and North Africa with a backpack. It became the best year of my life rather than a traumatic one.

Never put all your cash into real estate. You must have a reserve fund. Your investment dollars and your reserve fund must be separate.
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