The down payment for a rental property usually falls between 15 and 25 percent of the purchase price, but buyers willing to live in one unit of a two- to four-unit building can go much lower, sometimes to 3.5 percent with an FHA loan or zero with a VA loan. The exact figure turns on the loan program, the number of units, your credit score, and whether you plan to occupy the property yourself.
Conventional Minimums by Number of Units
Conventional mortgage lenders follow Fannie Mae and Freddie Mac underwriting. A single-family investment property can be purchased with as little as 15 percent down. A two-, three-, or four-unit investment property requires a minimum of 25 percent down.1Fannie Mae. Eligibility Matrix On a $300,000 single-family rental, 15 percent works out to $45,000 in cash. On a $500,000 fourplex, the 25 percent floor is $125,000.
Credit score requirements tighten as the down payment shrinks. To qualify at 15 percent down on a single-family rental, Fannie Mae requires a minimum credit score of 700. At 25 percent down (75 percent loan-to-value or below), the minimum drops to 680.1Fannie Mae. Eligibility Matrix Many lenders layer their own credit overlays on top, so a score of 720 or higher opens up the widest selection of loan options and the best pricing.
The higher equity requirement exists because investment properties default at higher rates than primary homes. When money gets tight, borrowers protect the roof over their own head first.
Why 25 Percent Down Often Beats the 15 Percent Minimum
Beyond the down payment itself, Fannie Mae charges loan-level price adjustments on every investment property mortgage. These fees are expressed as a percentage of the loan amount and get baked into your interest rate or paid as upfront points at closing.2Fannie Mae. B2-3-01, General Property Eligibility The less you put down, the larger the hit.
For a 2026 purchase, the adjustments run roughly as follows:3Fannie Mae. LLPA Matrix
- 25 percent down (75% LTV): 2.125 percent adjustment
- 20 percent down (80% LTV): 3.375 percent adjustment
- 15 percent down (85% LTV): 4.125 percent adjustment
On a $300,000 loan, the difference between 25 percent down and 15 percent down translates to roughly $6,000 in added upfront cost, or a meaningfully higher interest rate over the life of the loan. That is why the common advice to “put 25 percent down on a rental” persists. Fifteen percent is the floor; 25 percent buys substantially better pricing.
How to Put Less Down by Living in One Unit
The lowest down payments on rental property go to buyers who plan to live in one unit of a multi-family building. This approach, sometimes called house hacking, lets you finance a two-, three-, or four-unit property using loan programs designed for primary homes.
FHA at 3.5 Percent Down
FHA-insured mortgages allow a 3.5 percent down payment on properties with up to four units, as long as you occupy one unit as your primary home.4eCFR. 24 CFR 203.18 – Maximum Mortgage Amounts On a $400,000 triplex, that is just $14,000 down, with rent from the other two units covering much or all of the payment.
FHA loans carry mortgage insurance premiums for the life of the loan, and the property must appraise within FHA loan limits. For 2026, the baseline conforming loan limit is $832,750 for a single-unit property, with higher limits for multi-unit buildings and designated high-cost areas.5FHFA. FHFA Announces Conforming Loan Limit Values for 2026 One extra hurdle applies to three- and four-unit FHA purchases: the building must pass a self-sufficiency test showing that estimated net rental income covers the full monthly mortgage payment, and you need three months of payment reserves in your accounts after closing.6HUD. FHA Single Family Housing Policy Handbook
VA at Zero Down
Eligible veterans and active-duty service members can purchase a multi-unit property with up to four units and no down payment using a VA-backed loan.7Veterans Affairs. VA Home Loans VA loans also carry no private mortgage insurance, which pulls the monthly payment well below an equivalent FHA or conventional loan. You generally need to move in within 60 days of closing and certify that you intend to live there as your primary residence.8Veterans Affairs. Eligibility for VA Home Loan Programs
The Occupancy Rule Is Real
Both FHA and VA require genuine intent to occupy the property. Buying a fourplex with 3.5 percent down and renting all four units from day one is occupancy fraud, which is a federal offense. Penalties under federal bank fraud statutes can reach 30 years in prison and a $1 million fine. Lenders verify occupancy through signed certifications and sometimes physical inspection, and they refer cases to investigators. If your plans change and you need to move out inside the first year, contact your loan servicer before you do.
DSCR Loans When You Don’t Want to Document Personal Income
Debt service coverage ratio loans offer another path for buyers who would rather not provide W-2s or tax returns. Instead of verifying your personal income, the lender qualifies the property itself by comparing its rental income to the mortgage payment. A DSCR of 1.0 means the rent exactly covers the debt; most lenders prefer at least 1.25.
The trade-off is a higher down payment. Most DSCR lenders want 20 to 25 percent down when the property’s ratio is strong. If the ratio falls below 1.0, expect 30 to 35 percent down to make up for the thinner income cushion. Interest rates also run higher than conventional investment loans, so DSCR financing makes the most sense for investors with cash on hand whose tax returns understate their real earning power because of depreciation and other write-offs.
What You Need Beyond the Down Payment
The headline percentage understates the cash you actually need to close.
Six Months of Reserves
Fannie Mae requires six months of mortgage payments in reserve for any investment property financed through a conventional loan. That means six months of principal, interest, taxes, insurance, and any association dues sitting in your account after the down payment and closing costs clear. On a property with a $2,000 monthly payment, that is another $12,000 you cannot touch. Reserve requirements climb further once you hold five or more financed properties, reaching 6 percent of total unpaid balances at seven to ten properties.9Fannie Mae. Minimum Reserve Requirements
Closing Costs
Closing costs on a rental property typically run 3 to 6 percent of the purchase price, covering lender origination fees, the appraisal, title insurance, escrow fees, and prepaid taxes and insurance. On a $300,000 purchase, budget $9,000 to $18,000 on top of your down payment. Your lender must provide a Loan Estimate within three business days of your application itemizing these charges.
No Gift Funds
Gift funds are prohibited for investment property purchases under conventional guidelines. Every dollar of the down payment must come from your own accounts.10Fannie Mae. B3-4.3-04, Personal Gifts This is a sharp break from primary residence rules, where family help is routine. If a relative wants to contribute, the money generally needs to sit in your account long enough to season as your own funds. Expect to provide at least 60 days of bank statements, and be ready to document any deposit equal to 50 percent or more of your monthly qualifying income.11Fannie Mae. B3-4.2-01, Verification of Deposits and Assets
Put It All Together
Add these pieces up and the true cost of buying a rental property comes into focus. On a $300,000 single-family rental at the 15 percent minimum, you might need $45,000 for the down payment, $12,000 in reserves, and roughly $12,000 in closing costs. That is close to $69,000 in liquid assets for a property that technically only requires “15 percent down.” Work backward from that number, not the down payment percentage alone, when you decide what you can afford.