You cannot put 10% down on an investment property through a standard conventional loan. Fannie Mae’s eligibility matrix caps the loan-to-value ratio at 85% on a one-unit rental, which means 15% down is the floor for conventional financing on a property you won’t live in.1Fannie Mae. Eligibility Matrix Investors reach 10% (or lower) by taking a different path: buying a two- to four-unit building and living in one unit, or qualifying the purchase as a second home rather than a rental. Each route has strict rules, and misrepresenting which one applies to you is a federal crime.
Why 15% Is the Conventional Floor
Fannie Mae and Freddie Mac set the underwriting rules most mortgage lenders follow. For a one-unit investment property, the maximum LTV is 85%. For two- to four-unit investment properties, the cap drops to 75%, requiring 25% down.1Fannie Mae. Eligibility Matrix
The higher thresholds exist because non-owner-occupied properties default at higher rates. A borrower who doesn’t live in the home has less personal incentive to keep payments current in a rough patch, and lenders price that risk in. So if the plan is a standalone rental you’ll never occupy, 10% down through a conventional mortgage simply isn’t on the menu.
Buy a Multi-Unit and Live in One Unit
The most common way investors get below 15% down is a two- to four-unit building where the borrower occupies one of the units. Lenders treat the purchase as a primary residence rather than an investment, which unlocks much lower down payment options while still letting you collect rent from the other units.
Conventional at 5% Down
Fannie Mae’s matrix allows a 95% LTV on owner-occupied two- to four-unit properties, meaning as little as 5% down.1Fannie Mae. Eligibility Matrix The trade-off is private mortgage insurance until you build sufficient equity, plus loan-level pricing adjustments that raise your rate.
FHA at 3.5% Down
FHA guidelines allow borrowers with a credit score of 580 or higher to buy properties with up to four units for 3.5% down, provided the borrower lives in one unit. Three- and four-unit buildings must pass a self-sufficiency test: net rental income from all units (after a vacancy deduction) has to equal or exceed the total monthly mortgage payment.2HUD. HUD HOC Reference Guide – Rental Income FHA also requires three months of verified reserves after closing on three- and four-unit purchases, and those reserves cannot come from gift funds.
VA at Zero Down
Eligible veterans and service members can purchase owner-occupied properties with up to four units through a VA-backed loan with no down payment at all, so long as the sale price doesn’t exceed the appraised value.3Veterans Affairs. Purchase Loan VA loans also carry no private mortgage insurance, making them the strongest financing available for qualifying borrowers who want to house-hack a small multi-unit.
You Actually Have to Live There
Every low-down-payment option for multi-unit properties turns on real occupancy. FHA requires at least one borrower on the mortgage to move in as their primary residence within 60 days of closing and to stay for a minimum of 12 months. Conventional and VA loans impose similar residency rules. If you fail to occupy the property as agreed, the lender can call the entire loan balance due immediately.
Finance It as a Second Home
If living in the building isn’t your plan, financing the property as a second home lets many borrowers put 10% down through a conventional loan. Lenders classify second homes differently from investment properties, and the distinction shapes both your down payment and your legal obligations.
Fannie Mae’s second-home requirements include the following: the property must be a one-unit dwelling suitable for year-round occupancy, the borrower must occupy it for at least part of the year, and the borrower must maintain exclusive control over the property.4Fannie Mae. Occupancy Types Many individual lenders add their own rules, such as a minimum distance from your primary residence. The property also cannot be subject to any management agreement that gives a third party control over occupancy.
Rental income from a second home is permitted, but that income cannot be used to help you qualify for the mortgage, and personal use has to remain the property’s primary purpose.4Fannie Mae. Occupancy Types The IRS draws its own line: rent it fewer than 15 days a year and you don’t report the rental income at all; rent it 15 days or more and you report all rental income and split expenses between personal and rental use.5Internal Revenue Service. Publication 527 (2025), Residential Rental Property Push the rental activity too far and the lender may reclassify the loan as an investment property, which triggers the higher equity requirements you were trying to avoid.
What DSCR and Portfolio Lenders Won’t Do
Debt service coverage ratio (DSCR) loans and portfolio lenders operate outside the Fannie Mae and Freddie Mac framework. DSCR loans qualify borrowers based on whether the property’s rental income covers the mortgage payment rather than on personal income, and a DSCR of 1.25 or above generally gets the best terms.
These loans do not, however, open a path to 10% down on a pure investment property. Most DSCR lenders require 20% to 25% down, with a few offering programs at 15% for well-qualified borrowers. Hard money lenders typically lend at 60% to 75% of a property’s value, requiring 25% to 40% from the borrower, at higher rates and shorter terms. Some regional portfolio lenders set their own risk parameters and may offer more flexibility if you keep significant deposits with the institution, but whether any lender will actually go to 10% on an investment property depends entirely on their internal appetite and your banking relationship. The safe assumption is no.
The Real Cost of a Smaller Down Payment
Even where a lower down payment is available, Fannie Mae imposes loan-level price adjustments (LLPAs) that raise your rate based on property type and LTV ratio. For investment properties, these adjustments climb sharply as the down payment shrinks: roughly 2.125% at 25% down, 3.375% at 20% down, and 4.125% at 15% down.6Fannie Mae. Loan-Level Price Adjustment Matrix Moving from 25% down to the 15% minimum adds roughly two full percentage points in pricing, which shows up as a meaningfully higher monthly payment. Owner-occupied multi-unit financing at 5% down escapes the investment-property LLPA, but you’ll face primary-residence LLPAs and private mortgage insurance instead.
The down payment is also only part of the cash you need at closing. Closing costs typically run 2% to 5% of the loan amount, and investment property loans often fall toward the higher end. Fannie Mae requires six months of reserves for investment property transactions, held in liquid, verified accounts separate from your down payment and closing costs.7Fannie Mae. Minimum Reserve Requirements If you already carry multiple financed properties, additional reserves apply based on the total.8Fannie Mae. B2-2-03, Multiple Financed Properties for the Same Borrower Between closing costs, escrow funding, and required reserves, the true cash outlay for a 15%-down investment property can reach 25% to 30% of the purchase price.
Do Not Lie About Occupancy
Every low-down-payment path above depends on how the property is classified on your mortgage application. Claiming you’ll occupy a home to secure better loan terms when you actually intend to rent it out is occupancy fraud, and federal regulators treat it as a serious offense.
The Federal Housing Finance Agency defines occupancy fraud as falsely stating the borrower’s intent to live in a property to obtain more favorable terms than an investment or second home would qualify for. Fannie Mae, Freddie Mac, and the Federal Home Loan Banks are required to maintain fraud detection programs and report suspicious activity to law enforcement.9Federal Housing Finance Agency. Fraud Prevention
Under 18 U.S.C. ยง 1014, making a false statement on a mortgage application to a federally insured financial institution is a federal crime punishable by up to 30 years in prison and fines up to $1,000,000.10Office of the Law Revision Counsel. 18 U.S. Code 1014 – Loan and Credit Applications Generally Even without criminal prosecution, the lender can demand immediate full repayment of the loan. If you want 10% down, the way to get there is to actually meet the occupancy rules for the loan program you’re using, not to sign paperwork saying you will and then do something else.