As of July 2026, primary residence mortgage rates average 6.56% for a 30-year fixed loan, while investment property mortgage rates run 0.5% to 1% higher, landing around 7.06% to 7.56%.
How much more do you actually pay?
The national average 30-year fixed primary residence mortgage APR is 6.56% according to Bankrate’s daily lender survey. Add the standard investment property premium, and you’re looking at a rate in the 7.06% to 7.56% range for a comparable investment property loan.
On a $400,000 purchase with 20% down ($320,000 loan), that plays out as follows (estimated monthly principal and interest only):
The gap of $106 to $215 per month compounds. At 7.56% versus 6.56% on the same $320,000 loan, the total interest paid over 30 years is roughly $77,000 more. That’s the real cost of the spread, not the rate itself, but what it does to your numbers over time.
These estimates assume a 720+ credit score, 20% down, single-unit property, and a competitive lender. Your actual rate depends on all four of those variables.
Why are investment property rates higher?
It all comes down to which mortgage you’d protect if things got tight. Your own home comes first. You live there, so that payment gets paid no matter what. A rental sits lower on that list. If a tenant stops paying or the unit sits empty for a month, the investment property mortgage is the one that slips first, and lenders know it.
Fannie Mae and Freddie Mac build that exact assumption into their pricing through loan-level price adjustments, or LLPAs, fees tied to your credit score and LTV that get layered onto investment property loans. That’s the mechanism behind your rate.
It’s not a penalty for being an investor. It’s just the market pricing in what happens when cash gets tight, and you have to choose.
What affects your specific rate?
That 0.5% to 1% premium isn’t one fixed number. Where you land in that range comes down to four things about you and the deal. Get these four rights, and you’re paying closer to 0.5%. Ignore them, and you’re paying closer to 1% or worse.
Credit score:
As we have seen at the Mortgage Shop, if you got approved on your primary residence at 740 or above, you’re probably walking into the best pricing on the investment side too. Drop below 700, and the gap starts opening up. Fall under 680, and you’re at the top of the range, maybe past it. This means the difference between your home payment and your rental payment just gets bigger, not smaller.
Down payment:
Put 25% down, and the premium usually shrinks toward 0.5%. Stick to the 15% minimum, and you’re closer to 1% or more above your primary residence rate. That extra cash at closing isn’t wasted. It often pays for itself fast through the lower monthly payment you get in return.
Property type:
A single-unit rental gets you the best pricing this category has to offer. Move up to a 2–4-unit property and the premium widens. Cross into five or more units, and you’re not in this pricing world anymore. That’s commercial underwriting, a different game entirely.
Loan term:
A 15-year term gets you a lower rate and real savings on total interest, whether it’s your home or your rental. But the payment jumps. On a rental, that’s not just a budgeting question. It’s whether the property still cash-flows once that bigger payment hits. Run your numbers on this specific property before you commit to the shorter term.
Loan types that make sense for investment properties
Conventional financing
You’re probably already familiar with conventional financing. The standard path likely looks recognizable from your primary residence mortgage, documented income, a DTI ratio within lender limits (typically 43–45%), solid reserves, and a 15–25% down payment.
If your income shows up clean on W-2s or tax returns and this is your first or second investment property, start here. There’s no reason to make this more complicated than it needs to be.
DSCR Loans
DSCR loans start making sense once conventional says no. Maybe you’ve picked up several financed properties already, and your DTI won’t stretch any further. Maybe your income is self-employed, and your tax returns don’t tell the real story.
That qualification comes down specifically to whether the rent covers the mortgage payment. Hit a ratio of 1.0 or better, and you’re in. No W-2s or tax returns needed.
Yes, the rate runs a bit above conventional. However, given how much flexibility you’re getting, the gap is smaller than you’d expect.
Bank Statement Loans
This exists for one specific problem. You write off enough on your taxes that your real cash flow doesn’t match what your return says you make. If that’s you, tax-return underwriting was never going to work in your favor.
Lenders here look at 12 to 24 months of actual deposits instead. You’ll pay more than conventional, but you’ll actually get approved, which is the part that matters.
HELOC Loans
A HELOC loan on your primary residence is how a lot of investors fund the down payment without touching savings. If you’ve got equity built up, it gives you revolving access to that cash. Just don’t forget: that HELOC payment counts against your DTI when you apply for the investment property loan. Run your ratios with it already factored in, before you draw on it, not after.
How to bring the rate down?
- Raise your credit score before applying: Your credit score does more work here than it did on your own home. Get from 680 to 720, and your rate will drop noticeably. So, it’s better to pull your report first, clean up any errors sitting on it, and knock down revolving balances before you apply. That’s the cheapest rate improvement available, and it costs nothing but time.
- Put more down: More money down buys you a better number too. Going from 20% to 25% typically shaves 0.25% or more off your rate. Whether that’s worth it depends on what else that cash could be doing. If you’ve got another deal lined up, keeping the capital might beat the rate savings.
- Compare at least three lenders: Investment property pricing swings more between lenders than primary residence pricing does. A 0.25% to 0.5% spread on identical borrower profile isn’t unusual. Get three quotes on the same day with the same property details, or you’re not actually comparing anything.
- Consider a shorter term: If the numbers work, look at a 15-year term. You’ll pay less total interest and get a lower rate. The catch is a bigger monthly payment. Before you lock that in, run it against the property’s actual rent. If it still cash-flows after the higher payment, take the shorter term. If it doesn’t, you already have your answer.
