Rental property down payments usually range from 15% to 25% of the purchase price, though some lenders will go as low as 10% and a few require 30%

The amount you put down depends on the lender, the type of property, how many rental units you already own, and your credit score. A single-family home typically requires less down than a multi-unit building. If this is your first rental property, expect to put down more than someone with an existing portfolio. Your down payment directly affects your interest rate, monthly payment, and whether you'll need to pay mortgage insurance.

Unlike owner-occupied homes, where 3% down is sometimes possible, rental properties are treated as investments. Lenders see them as higher risk because tenants can stop paying rent, whereas owner-occupants have a personal stake in keeping up the property. That risk premium shows up in the down payment requirement.

Key Takeaways

  • Most lenders require 15% to 25% down for a rental property, with 20% being the most common threshold.
  • Your first rental property usually requires a larger down payment than subsequent ones, and single-family homes typically require less than multi-unit buildings.
  • Putting down less than 20% usually triggers private mortgage insurance (PMI), which adds to your monthly payment and does not build equity.
  • Your credit score, debt-to-income ratio, and cash reserves all affect what down payment a lender will accept.
  • Some portfolio lenders and credit unions have different rules than conventional banks and may accept 10% down, though at a higher interest rate.

How down payment changes by property type

A single-family home rented to one tenant usually requires 15% to 20% down. A duplex, triplex, or fourplex (a building with two to four units) typically requires 20% to 25% down. A larger apartment building with five or more units may require 25% to 30% down, and some lenders will not finance them at all without significant experience on your part.

The reason is straightforward: the more units in the building, the more tenants can default at once. A single-family home losing one tenant is a problem. A five-unit building losing two tenants is a different category of risk. Lenders price that in by asking for more cash upfront.

Commercial properties and mixed-use buildings (retail on the ground floor, apartments above) have their own rules and often require 25% to 30% down. If you are considering anything beyond a standard single-family or small multi-unit building, contact lenders who specialize in that property type before you make an offer.

What happens if you put down less than 20%

When your down payment is below 20%, lenders require you to carry private mortgage insurance (PMI). This is an insurance policy that protects the lender if you default. You pay the premium as part of your monthly mortgage payment, and it does not build equity or reduce your loan balance.

PMI typically costs 0.5% to 1.5% of your loan amount per year, depending on how much you put down and your credit score. On a $300,000 loan with 10% down, PMI might add $150 to $450 per month. That cost stays on your loan until you have paid down the principal to 80% of the original purchase price, which can take years.

Some lenders will remove PMI once you reach 80% equity through appreciation or principal paydown. Others require you to request removal at that point. A few will not remove it at all. Ask the lender about their PMI removal policy before you sign.

How your credit score and finances affect the down payment

A credit score above 740 usually qualifies you for the lowest down payment a lender offers. A score between 680 and 740 may require 5% more down. Below 680, some lenders will not finance rental properties at all, or will require 30% down and charge a higher interest rate.

Lenders also look at your debt-to-income ratio — the percentage of your gross monthly income that goes to debt payments. For rental properties, most lenders want this ratio below 43%, though some will go to 50% if you have strong reserves. If you already have a mortgage, car loans, and credit card debt, adding a rental property loan may push you over that threshold.

Cash reserves matter too. Lenders want to see that you have money set aside for emergencies. If you are putting down 15% and have no savings left, a lender may ask for 20% down instead. If you have six months of expenses in the bank, they may accept 10% down. The logic is that reserves show you can cover a vacancy or repair without defaulting.

Down payment requirements for your first rental versus subsequent ones

Your first rental property usually requires a larger down payment than your second or third. Many lenders want to see that you have successfully managed at least one rental property before they lower their requirements. Once you have owned a rental for one to two years and made on-time payments, some lenders will accept 15% down on the next property instead of 20%.

A few lenders offer portfolio loans, which are mortgages held by the lender rather than sold to investors like Fannie Mae or Freddie Mac. Portfolio lenders sometimes have more flexibility on down payments for repeat investors because they keep the loan on their books and care more about your track record than your credit score alone. These loans are less common but worth asking about if you plan to build a rental portfolio.

Where to find lenders with different down payment rules

Conventional lenders like Bank of America, Wells Fargo, and Chase typically require 20% to 25% down for rental properties. Credit unions often have lower requirements — some will go to 15% down — and may be more flexible if you are a member. Local and regional banks sometimes offer portfolio loans with 10% to 15% down, especially if you have a relationship with them.

Mortgage brokers can shop multiple lenders at once and may find options you would not find on your own. They charge a fee (usually 0.5% to 1% of the loan amount), but if they find a lender willing to go 10% down instead of 20%, that fee pays for itself in the first year.

Online lenders and fintech companies have entered the rental property market in recent years, though their down payment requirements vary widely. Some require 20% or more; others advertise 10% down. Read the fine print carefully, because some of these lenders charge higher interest rates or have stricter requirements on property condition or tenant history.

How to calculate what you can afford to put down

Start with the purchase price and work backward. If you are buying a $300,000 property and want to put down 20%, that is $60,000 in cash. Add closing costs, which typically run 2% to 5% of the purchase price — another $6,000 to $15,000. Then add a reserve for repairs and vacancies, which should be at least 10% of the purchase price, or $30,000 in this example.

That means you need roughly $96,000 to $105,000 in liquid funds to buy a $300,000 property comfortably. If you have $80,000, you could put down 15% ($45,000), pay closing costs ($9,000), and have $26,000 left for reserves. That works, but it leaves you thin if the roof needs replacing in year two.

The down payment is not the only money you need. Factor in the cost of inspections, appraisals, title insurance, and any repairs the lender requires before closing. Then keep a separate emergency fund for the property itself — vacancy, repairs, and turnover costs. A down payment calculator can help you model different scenarios, but the math is straightforward: add up what you have, subtract what you need to spend, and see what is left for the down payment.

Frequently Asked Questions

Can I use a gift or loan from family for the down payment?

Most lenders allow gift funds from family members, but they require a signed gift letter stating the money does not need to be repaid. Some lenders limit gifts to a percentage of the down payment. Loans from family are treated differently — the lender counts them as debt and includes them in your debt-to-income ratio, which can disqualify you or require a larger down payment.

What if I use a home equity line of credit to fund the down payment?

A HELOC counts as debt on your credit report and increases your debt-to-income ratio. Lenders will factor it into their decision, and it may require you to put down more cash or accept a higher interest rate. Some lenders will not allow it at all. Ask before you open the HELOC.

Is it better to put down 10% or 20%?

Putting down 20% avoids PMI and usually gets you a lower interest rate, which saves money over the life of the loan. Putting down 10% keeps more cash in your pocket for repairs, vacancies, or other investments. The choice depends on your cash position and how confident you are in the property's rental income. If you are tight on cash, 10% down with PMI may be the only option. If you have reserves, 20% down usually makes financial sense.

Do investment property down payments work the same way for commercial real estate?

Commercial properties (office buildings, retail, warehouses) typically require 20% to 30% down and have stricter lender requirements. Mixed-use properties (retail plus apartments) fall somewhere in between. If you are considering commercial real estate, contact lenders who specialize in it — the rules are different enough that a residential mortgage broker may not be helpful.

Can I get a rental property loan with no money down?

No. Conventional lenders require at least 10% down, and most require 15% to 25%. Some government-backed loans like FHA mortgages allow lower down payments on owner-occupied homes, but they do not cover investment properties. If you have no savings, you would need to save first or find a partner to co-invest.