Interest Rates for Investment Properties: What to Expect

A conventional loan on a rental costs more than the same loan on a home you live in because Fannie Mae charges lenders an extra fee on every investment property loan, and lenders pass it to you as discount points or a higher rate. On Fannie Mae's current pricing matrix, that fee is 2.125% of the loan amount at 75% loan-to-value (LTV) and 3.375% at 80% LTV, on top of the credit score fee every borrower pays. For context, Freddie Mac's weekly survey put the average 30-year fixed rate at 7.32% on October 22, 2026, but that average covers only owner-occupied homes bought with 20% down by borrowers with good credit, so it is not a quote for a rental.

Why investment property rates are higher

Fannie Mae and Freddie Mac buy conventional mortgages from lenders. Fannie Mae charges each lender upfront fees called loan-level price adjustments (LLPAs), a percentage of the loan amount based on the loan's risk. Fannie Mae's rules state that an LLPA applies to every mortgage secured by an investment property, in addition to the adjustments for credit score, LTV, and other features.

The lender then gives you a choice. You can pay the cost at closing as discount points (one point is 1% of the loan amount), or take a higher rate and pay little or nothing upfront.

The Fannie Mae adjustments that apply to a rental purchase

Your total LLPA is the sum of the rows that apply to you. LTV here is the loan amount divided by the lower of the purchase price or the appraised value, so an appraisal below the price raises your LTV and can move you up a row. These are the purchase-loan figures on the matrix dated September 30, 2026.

The credit score adjustment for loans with terms over 15 years is charged to every borrower, owner-occupant or not:

At more than 80% LTV, you also pay private mortgage insurance, which Fannie Mae requires on any conventional loan above 80% LTV. The maximum for a 1-unit rental purchase is 85% LTV, and for a 2-4 unit rental it is 75%. The conventional loans for investment property page covers those limits.

Worked example: what the adjustments cost

You are buying a $300,000 single-family rental with a 750 credit score, and the home appraises at or above the price.

At 20% down, the investment fee adds 3.375 points ($8,100) compared with buying the same home to live in. If you take that cost in the rate instead, how much the rate rises depends on how your lender's rate sheet trades points for rate, which varies by lender and by day. As an illustration only, at an assumed 0.25 percentage point of rate per point, 3.375 points would add about 0.84 percentage point to the rate. Ask each lender for the actual figure.

How DSCR and hard money pricing compare

DSCR loans (debt service coverage ratio loans, which qualify you on the property's rent instead of your income) and hard money loans are not sold to Fannie Mae, so Fannie Mae's matrix does not apply. Each lender sets its own price for the risk it takes.

• DSCR loans: Ask how the rate changes with the coverage ratio (rent divided by the payment), your LTV, your credit score, and the prepayment penalty you choose. A rental loan to an owner who will not live in the property is business-purpose credit under federal rules, so the consumer protections in Regulation Z, including its limits on prepayment penalties and the Loan Estimate form, do not apply. Read the penalty terms before you compare rates. See DSCR loans explained.
• Hard money loans: These are short-term loans priced with an interest rate plus upfront points. Compare the total cost over the months you expect to hold the loan, and price the refinance you will need to pay it off. Refinancing an investment property covers that exit.

Because none of these loans come with a standard federal disclosure, get each quote in writing with the rate, points, lender fees, and prepayment terms listed separately.

Levers that change your quote

1. Cross an LTV tier. Each table row ends at a fixed LTV. In the example, going from 20% to 25% down cut the fees from 4.25 to 2.5 points. An LTV of exactly 75% prices in the 70.01% to 75% row, so a small extra payment that brings you from 75.5% to 75% can move you down a tier.
2. Reach a higher credit score tier. At 75% LTV, moving from 700-719 to 740-759 lowers the credit fee from 0.875% to 0.375%. Paying card balances down before the lender pulls credit can lift a score that sits just below a cutoff.
3. Buy down the rate with discount points. Points cost 1% of the loan each, and the rate cut per point varies. Points pay off only if you keep the loan long enough, so ask the lender to compare total costs over the years you expect to hold it.
4. Compare fixed and adjustable rates. Fannie Mae's matrix adds no ARM fee at these LTVs, and many ARMs start below fixed rates. After the fixed period, the rate changes on a set schedule, limited only by any caps in your loan terms, and the payment usually rises if rates are higher. Do not count on selling or refinancing before the first adjustment.
5. Consider a 15-year term. On Fannie Mae's matrix, the credit score grid applies to loans with terms over 15 years, while the investment property fee applies to every term. The monthly payment is higher, which reduces the rental's monthly cash flow and raises your debt-to-income ratio (monthly debts divided by gross monthly income), the figure lenders use to approve you.
6. Shop at least three lenders with the same points. The fees above are what Fannie Mae charges; each lender adds its own margin. See comparing lenders for investment property loans for what to ask.

For the down payment, reserves, and DTI a lender needs before any of this pricing matters, see tips for getting approved for an investment property mortgage.