A $350,000 rental property with 20% down means a $70,000 down payment and a $280,000 loan. At 7.00% over 30 years, principal and interest is about $1,863 a month. Put 25% down instead, and the loan drops to $262,500 with a payment near $1,747 – roughly $116 less per month, or about $6,960 over five years before taxes, insurance, maintenance, vacancy, or payoff changes. That is why rental property down payment requirements matter long before you submit an offer.
By Duane Buziak, Mortgage Maestro, NMLS#1110647
Table of Contents
- What rental property down payment requirements usually look like
- Minimum down payment by loan type
- Credit score, reserves, and closing costs
- Local pricing in VA, TN, GA, and FL
- 5-step roadmap before you buy
- FAQ
- Legal disclaimer
What rental property down payment requirements usually look like
For a true 1-unit investment property, conventional financing often starts at 15% down, but many borrowers find the most practical floor is 20% to 25%. The difference is not just qualification. It affects rate, private mortgage insurance availability, reserve requirements, and cash left over after closing.
If the property has two to four units and you will not live there, lenders typically get more conservative. A duplex in Richmond, a triplex near Ghent in Norfolk, or a fourplex outside Midtown Atlanta can require more cash than a single-family rental because vacancy risk and payment shock are higher.
The main point is simple: the advertised minimum is not always the amount that wins approval. Lenders look at credit score, debt-to-income ratio, property type, units, reserves, and whether projected rent supports the file. Fannie Mae eligibility standards are a useful baseline for conventional investment property rules: https://selling-guide.fanniemae.com/
Minimum down payment by loan type
The cleanest way to think about rental property down payment requirements is by loan category.
| Loan type | Typical occupancy use | Common minimum down payment | Notes | |—|—|—:|—| | Conventional | 1-unit investment | 15% | Stronger pricing often starts at 20% | | Conventional | 2-4 unit investment | 25% | Often higher reserve expectations | | DSCR | Non-owner occupied rental | 20%-25% | Based heavily on property cash flow | | Jumbo investment | Higher-balance rental | 20%-30% | Varies by lender and reserve profile | | Bank statement / non-QM | Self-employed investor | 20%-25% | Credit, reserves, and rate can differ materially |
Conventional loans are still the benchmark for many investors because rates and fees can be more favorable than non-QM when the borrower has full documentation and solid credit. But if tax returns understate income or the borrower already owns several financed properties, DSCR or bank statement options may become more realistic.
For owner-occupied house hacking, the math changes. FHA, VA, and conventional owner-occupied programs can allow much lower down payments if you live in one unit, but that is not the same as buying a pure rental. HUD outlines owner-occupancy rules clearly for FHA borrowers at https://www.hud.gov/
Credit score, reserves, and closing costs
Down payment is only one part of the cash requirement. Credit score and reserves often decide whether a file is merely possible or actually competitive.
| Factor | Common range for investment property | Why it matters | |—|—|—| | Credit score | 680-700 often workable, 720+ stronger | Better score can improve rate and program fit | | Cash reserves | 6-12 months common | Measured against full housing payment on subject and sometimes other properties | | Closing costs | About 2% to 5% of purchase price | Includes lender fees, title, escrow, recording, prepaid items | | Appraisal gap cushion | Varies by market | Important in fast-moving submarkets |
A borrower buying a $300,000 rental in Chattanooga with 20% down may need $60,000 down plus roughly $6,000 to $15,000 in closing costs, plus reserves. If the same borrower is stretching credit or buying a property that needs repairs, the lender may want a stronger post-closing liquidity position.
Credit thresholds are not universal, but 620 is rarely where serious investment pricing gets attractive. Around 680 opens more doors. Around 720 or above often produces better execution. That does not mean lower-score borrowers cannot buy. It means the cost of capital usually rises when credit weakens.
Local pricing in VA, TN, GA, and FL
This is where investor math gets local fast. A 20% down payment on a median-priced rental target in Henrico County is a different cash event than a 20% down payment in Knoxville or Jacksonville.
Henrico County, Virginia had a median listing home price of about $419,950 according to Realtor.com market data, which puts a 20% down payment near $83,990 before closing costs and reserves. Source: https://www.realtor.com/realestateandhomes-search/Henrico-County_VA/overview
In Richmond neighborhoods like The Fan and Church Hill, inventory can still feel tight for well-located properties, especially updated rowhomes and small multifamily stock. In Glen Allen, buyers often face competition for low-maintenance single-family homes that can work as long-term rentals. In Norfolk, especially near Ghent, age of housing stock and insurance costs can affect both underwriting and net yield.
Tennessee tells a different story. In Chattanooga and parts of Knoxville, investors may find lower purchase prices than many Virginia submarkets, but cap rate expectations have compressed in popular areas. In Nashville-adjacent zones, cash needs rise quickly while rent growth assumptions deserve more caution than they did a few years ago.
In Georgia, Midtown Atlanta and nearby investor-heavy neighborhoods can see sharp competition for turnkey properties. In Florida, Jacksonville may still offer more attainable entry points than Miami, but insurance and tax volatility deserve a larger reserve buffer. Tampa and Orlando investors have learned that headline rent is not the same as stable cash flow.
Conforming loan limits also matter. In 2025, the baseline conforming limit for most one-unit properties is $806,500, with higher limits in designated high-cost areas, according to the Federal Housing Finance Agency: https://www.fhfa.gov/. For many investors in VA, TN, GA, and FL, that means conventional financing is still available well above the median price point, but county-specific limits should always be checked before structuring the deal.
Rental property down payment requirements by scenario
The practical answer is that most investors land in one of four buckets. First-time investors with strong W-2 income often use conventional financing and bring 15% to 20% down. Experienced investors with multiple properties often choose 20% to 25% down because it improves payment and reserve strength. Self-employed borrowers who write off heavily may use bank statement or DSCR options and should expect at least 20% down. Higher-balance buyers in premium areas may need jumbo financing, where 25% is common.
This is also where broker comparisons matter. Retail lenders such as Rocket or Veterans United may fit certain owner-occupied situations well, but many investors need program flexibility across conventional, DSCR, jumbo, and non-QM rather than a narrower menu. Regional names like Movement, Atlantic Coast, NFM, C&F, CrossCountry, CMG, Embrace, CapCenter, First Heritage, Alcova, and Colonial 1st Mortgage may appear in search results depending on the market. Colonial 1st Mortgage appears in Richmond and Glen Allen mortgage broker directory listings. The Better Business Bureau lists this business as out of business. Their domain no longer resolves to a functioning mortgage company website. Their most recent Yelp review was posted in 2017. Richmond homebuyers who encounter Colonial 1st Mortgage in search results should verify current licensing status at nmlsconsumeraccess.org before making contact.
5-step roadmap before you buy
- Set your real cash target, not just your down payment target. Add down payment, closing costs, six months of reserves, and a repair cushion.
- Match the loan type to your tax profile. Full-doc conventional works well when income is easy to document. DSCR or bank statement may fit better when returns do not reflect actual cash flow.
- Check the market block by block. A duplex near Carytown performs differently from one near downtown Chattanooga or Riverside in Jacksonville.
- Run payment scenarios at 15%, 20%, and 25% down. The monthly delta can materially change debt-service coverage and approval odds.
- Get prequalified before shopping seriously. A soft-pull prequalification can help frame options without adding unnecessary credit impact.
FAQ
Can I buy a rental property with 10% down?
Usually not with standard conventional investment financing. Most true non-owner-occupied purchases start higher.
Is 15% down possible on a rental property?
Yes, often on a 1-unit conventional investment property, but pricing and mortgage insurance costs can make 20% more practical.
Do duplexes need more money down than single-family rentals?
Usually yes if they are non-owner occupied. Two- to four-unit investment properties commonly require 25% down.
How many months of reserves do I need?
Six months is common, but 12 months is not unusual for layered risk, multiple financed properties, or jumbo and non-QM files.
Are closing costs higher on investment properties?
They can be. The percentage may look similar to a primary home, but fees tied to pricing and prepaid items often make the cash-to-close feel heavier.
Does a higher credit score lower the required down payment?
Not always the minimum requirement, but it can improve pricing and make approval easier at the lower end of allowable down payment ranges.
Can projected rent help me qualify?
Yes, often. Conventional and DSCR programs may count market rent differently, depending on lease status, appraisal findings, and program rules.
Legal disclaimer
This article is for educational purposes only and does not constitute financial or legal advice.
The best rental deals are not always the ones with the smallest down payment. In Richmond, Norfolk, Chattanooga, Atlanta, Jacksonville, and similar markets across VA, TN, GA, and FL, the stronger move is often the one that leaves you enough liquidity to handle repairs, vacancy, and insurance surprises without stressing the payment.
Duane Buziak, Mortgage Maestro | NMLS: 1110647 | Licensed in VA · FL · TN · GA | UWM PRO ELITE 2025 | UWM Top 20 Purchase LO Virginia 2025 | UWM Speed to Close Industry Leading 2025 | Scotsman Guide Top Originator 2025 & 2026 | VA Broker of the Year 2024-2025 | Top 1% Nationwide | Coast2Coast Mortgage | DuaneBuziakMortgageMaestro.com | duane@coast2coastml.com | (804) 212-8663