How much do I need for a down payment on an investment property?

Investment property loans generally require a bigger down payment than owner-occupied purchases, commonly in the 15 to 25 percent range depending on the lender, loan type, and property. Some programs and properties require more. The exact number depends on the lender's risk appetite and how the deal is structured.

Because the down payment is larger, plan the financing before you make offers. Knowing the requirement shapes how much property you can afford and how much cash you need to close.

Lenders require more equity on investment properties because the loans are riskier. A borrower is less likely to prioritize a rental when times get tough, and a vacant property produces no income to service the loan. A larger down payment gives the lender a cushion and reduces the chance of an underwater loan.

The higher requirement is part of the investment reality, not a quirk of one lender. Expect it across the market and build it into your plan.

Beyond the down payment, lenders want cash reserves, and the closing itself has costs. Most investment lenders require several months of reserves after closing, so the mortgage can be covered during a vacancy. Closing costs, including origination, title, and any transfer taxes, add to the cash you bring.

In Philadelphia, the realty transfer tax is a meaningful closing cost to plan for. Total your full cash needed, not just the down payment, so you are not caught short at closing.

Different loan types carry different down payment requirements, so compare the options before committing. A conventional investment loan is the most common path, and some lenders offer programs with different terms. The down payment can vary with the property type, the number of units, and your overall financial strength.

Talk to a lender who specializes in investment financing to see the full menu: the rates, the down payments, and the reserve requirements for each option. The right choice depends on your cash and your goals.