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Financing Investment Properties

Financing an investment property is different from financing a primary residence. The options, requirements, and strategies are distinct — and choosing the right one can make or break your deal.

One of the most common questions new investors ask is: "How do I get a loan for a rental property?" The answer depends on your financial profile, the property type, and how many properties you already own. Here's a breakdown of the most common financing options available to Ohio real estate investors.

Conventional Investment Property Loans

15–25% down 620+ credit score Max 4 financed properties

Conventional loans (Fannie Mae and Freddie Mac) are the most common financing for 1–4 unit investment properties. They typically require 15–20% down for a single-family rental and 25% down for multi-unit properties. Credit scores need to be 620 or higher, and your debt-to-income ratio should ideally be below 43%. These loans are capped at four financed properties per borrower, making them ideal for new to intermediate investors.

Best for: Investors with 1–4 properties, solid credit, and the ability to put 20%+ down.

Portfolio Loans (Bank Balance Sheet Loans)

20–30% down Held by local banks Flexible terms

Portfolio loans are originated and held by local banks or credit unions rather than sold to Fannie Mae or Freddie Mac. This means the bank sets its own underwriting standards. For investors with 5+ properties or those who don't fit conventional guidelines, portfolio loans are a valuable option. Many Ohio community banks and credit unions offer these products and are familiar with local markets, making them excellent partners for investors building multi-property portfolios.

Best for: Investors with 4+ properties, self-employed borrowers, or those needing flexible terms.

DSCR Loans (Debt Service Coverage Ratio)

20–30% down No personal income verification Based on property cash flow

DSCR loans are a game-changer for investors. Instead of underwriting your personal income, the lender looks at the property's ability to pay for itself. If the rental income covers the mortgage payment (a DSCR of 1.0 or higher), you qualify — regardless of your W-2 income. This is particularly useful for self-employed borrowers, high-net-worth investors who don't want to disclose personal finances, and investors who've maxed out conventional loan limits. Interest rates are typically 1–2% higher than conventional loans, but the flexibility is worth the premium for many investors.

Best for: Self-employed investors, those with multiple properties, or anyone who wants to qualify based on the property's income rather than personal income.

Hard Money & Bridge Loans

10–15% down 12–18% interest Short-term (6–24 months)

Hard money loans are short-term financing secured by the property itself, not your creditworthiness. They're ideal for fix-and-flip investors or those buying distressed properties that don't qualify for conventional financing. Interest rates are higher (12–18%), and loan terms are shorter (6–24 months), but the money can close in days rather than weeks. In Ohio's competitive markets, hard money can give you the speed advantage needed to secure a deal before other buyers can get conventional financing in place.

Best for: Fix-and-flip investors, buyers of distressed properties, and competitive bidding situations.

Ohio Financing Considerations

Ohio's affordable property prices create unique financing advantages for investors:

Lower down payment in dollars: 25% down on a $255,000 Dayton property is $63,750 — compared to $125,000+ in higher-cost markets.
Cash flow cushion: Ohio's higher cap rates mean the spread between rental income and mortgage payments is wider, making it easier to qualify for DSCR and portfolio loans.
Local bank relationships: Ohio has a strong community banking sector. Building relationships with local lenders who understand your market can unlock portfolio financing that national banks won't offer.

Creative Financing Strategies

Beyond traditional loans, Ohio investors use several strategies to acquire properties with less capital:

House hacking: Buy a 2–4 unit property, live in one unit, and rent the others. With an FHA loan, you can put as little as 3.5% down on a multi-unit property. This is one of the most powerful ways to start investing in Ohio.
Seller financing: In some Ohio markets, sellers are willing to finance part or all of the purchase. This can mean lower closing costs, flexible terms, and no bank qualification.
Equity extraction: Once you own a property and it appreciates, you can use a cash-out refinance to pull equity out and reinvest in additional properties. Ohio's steady appreciation makes this strategy increasingly viable.
Partnerships: Pool capital with other investors. Ohio's affordable entry points make partnership structures accessible — a $50,000 contribution can be a meaningful stake in a Dayton duplex.

Need help finding the right financing?

Glasshouse Realty can connect you with local lenders who specialize in investment property financing in Ohio. From conventional to DSCR, we know who works best for each scenario.

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