Loans & Financing
Understanding the financing landscape is critical for scaling a real estate portfolio. Each loan type serves a different purpose and investor profile.
FHA Loans
Government-backed loans requiring as little as 3.5% down. Best for first-time homebuyers and house hackers. Must be owner-occupied. Limited to 1-4 units.
Conventional Loans
Standard bank loans typically requiring 5-20% down for primary residences, 15-25% for investment properties. Requires strong personal income and credit. Most common loan type.
VA Loans
Zero down payment loans for eligible veterans and active military. One of the best financing tools available. Can be used for 1-4 unit properties with owner occupancy.
DSCR Loans
Qualify based on the property's income, not your personal income. Ideal for scaling investors. Typically require 20-25% down. The property's cash flow must cover the debt payment.
Commercial Loans
Used for properties with 5+ units or commercial real estate. Terms are typically 5-10 years with 20-30 year amortization. Evaluated on property performance, not personal income.
Hard Money Loans
Short-term, high-interest loans (12-18 months) used for acquisitions and rehabs. Fast to close. Asset-based lending. Typically 10-15% interest with 2-4 points.
Private Money
Loans from individual investors rather than institutions. Terms are negotiable. Relationship-based. Can be more flexible than hard money but varies widely.
Seller Financing
The seller acts as the bank. You make payments directly to them. Terms are fully negotiable. Can unlock deals that traditional lending cannot.
HELOCs
Home Equity Line of Credit. Borrow against equity in a property you own. Revolving credit line. Often used for down payments on new acquisitions.
Bridge Loans
Short-term financing used to bridge the gap between purchasing a new property and selling an existing one, or between acquisition and permanent financing.
Portfolio Loans
Loans held by the originating bank rather than sold to secondary markets. More flexible underwriting. Can finance multiple properties under one loan.
Construction Loans
Short-term loans used to finance building or major renovation. Funds are disbursed in draws as construction progresses. Convert to permanent financing upon completion.