Loans to finance real estate purchases: a complete guide for investors
Written by Jay Beach, SVP, Investor Portfolio Lending · Reviewed by the Mortava lending team · Updated
Real estate investors have more financing options today than at any point in the past decade — and the loan you choose shapes your returns as much as the property you buy. This guide compares nine ways to finance a real estate purchase, from conventional mortgages to DSCR, bridge, fix-and-flip, construction, and portfolio loans. Use it to match the right capital to your strategy, hold period, and documentation style.
Investors can finance real estate purchases with conventional mortgages, DSCR loans, bridge loans, fix-and-flip loans, new-construction loans, portfolio loans, jumbo loans, or small-balance commercial financing. The right choice depends on how the property produces income, how fast you need to close, and how you document earnings. Stabilized long-term rentals typically fit DSCR or conventional loans, while short-hold and value-add projects fit bridge, fix-and-flip, or construction financing.
- Conventional loans qualify you on personal income and tax returns; DSCR loans qualify the property on its rental cash flow instead.
- Bridge and fix-and-flip loans trade higher cost for speed — closings can happen in days rather than the 30-45 days typical of agency financing.
- Portfolio (blanket) loans consolidate multiple properties under one note, and cash-out refinancing converts existing equity into acquisition capital.
- Match the loan term to the hold period: short-term debt for flips and repositions, 30- or 40-year terms for stabilized rentals.
- Business-purpose loans like DSCR, bridge, and fix-and-flip can close in an LLC; agency loans generally must close in your personal name.
Nine ways to finance a real estate purchase
There is no single best loan for buying real estate — there is a best loan for each strategy. A long-term rental, a six-month flip, a ground-up build, and a ten-property portfolio each call for a different structure, and using the wrong one costs you either money or speed.
The table below compares the nine most common loans to finance real estate purchases. The figures are market generalizations, not offers; actual terms vary by lender, property, and borrower.
Before diving into each option, four questions narrow the field quickly.
- How does the property make money — long-term rent, short-term rent, resale after renovation, or new construction?
- How do you document income — W-2s and tax returns, or would you rather qualify on the property’s cash flow?
- How fast do you need to close, and how long will you hold the debt?
- Will you buy in your personal name or through an LLC?
| Loan type | Typical use case | Qualification method | Loan term | Speed to close | Borrower profile |
|---|---|---|---|---|---|
| Conventional mortgage | Long-term rental held in your personal name | Personal income, tax returns, DTI | 15-30 years | Typically 30-45 days | W-2 or fully documented borrower with few financed properties |
| DSCR loan | Buy-and-hold rental purchased in an LLC | Property rental income vs. its payment (DSCR) | 30-40 years, fixed or interest-only | Typically 2-4 weeks | Investor scaling past agency limits or without tax-return income |
| Bridge loan | Fast acquisition or reposition before permanent financing | Asset value plus exit plan | 12-24 months | As fast as days | Investor competing with cash buyers or holding short-term |
| Fix-and-flip loan | Purchase plus renovation for resale | After-repair value, rehab budget, experience | 6-18 months | As fast as days | Flipper or value-add investor |
| New-construction loan | Ground-up build on owned or purchased land | Project budget, plans, builder track record | 12-24 months, draw-based | Typically 2-6 weeks | Builder or experienced investor |
| Portfolio / blanket loan | Multiple rentals financed under one note | Combined portfolio cash flow | Often 30 years | Typically 3-6 weeks | Investor consolidating or acquiring several properties |
| Jumbo loan | Home priced above conforming loan limits | Full personal income documentation | 15-30 years | Typically 30-45 days | High-income consumer borrower |
| Small-balance commercial | 5+ unit, mixed-use, or commercial property | Property net operating income and sponsor strength | 5-30 years, balloons common | Typically 4-8 weeks | Investor moving into commercial-scale assets |
| Cash-out refinance | Converting equity into capital for the next purchase | Depends on the loan used (DSCR, conventional) | Matches the new loan | Typically 2-6 weeks | Owner with meaningful equity in an existing property |
Conventional financing
Conventional mortgages are usually the cheapest way to finance a rental property — if you qualify. Because they are backed by Fannie Mae and Freddie Mac, they typically price lower than business-purpose investor loans and offer 15- to 30-year fully amortizing terms.
Qualification is entirely personal: tax returns, W-2s or self-employment documentation, a debt-to-income calculation, and credit history. Investment-property purchases generally require around 15-25% down depending on the unit count, plus cash reserves. Loan sizes are capped at conforming limits set annually by the FHFA — the 2026 baseline is $832,750 in most counties, higher in designated high-cost areas.
The constraints show up as investors scale. Fannie Mae guidelines generally cap a borrower at ten financed properties, every new rental adds debt to your personal DTI, and agency loans typically must close in your personal name rather than an LLC. Self-employed investors with aggressive write-offs often hit a documentation wall long before the property stops penciling — which is why many start conventional and move to DSCR financing as they grow.
DSCR loans
DSCR loans qualify the property instead of the person. A debt service coverage ratio (DSCR) loan sizes the mortgage against the property’s rental income relative to its full payment — no tax returns, W-2s, or personal DTI calculation required.
The ratio itself is simple: monthly rent divided by the monthly payment including taxes, insurance, and any association dues. A 1.00 DSCR means the rent exactly covers the payment; higher ratios generally unlock better pricing. Running the numbers with a DSCR calculator before you write an offer tells you whether a deal is financeable at your target leverage.
Terms now rival conventional structure. Mortava’s DSCR rental loans, for example, go up to 85% LTV on purchases with 30- and 40-year fixed and interest-only options, loan amounts from $100K to $3.5M, a 640 minimum FICO, and closings in an LLC or corporation. DSCR tiers extend down to 0.50, so properties that don’t yet cover their payment can still be financed at adjusted terms. Short-term rental investors can qualify on projected nightly income through dedicated Airbnb/STR DSCR programs, and the mechanics are covered in depth in DSCR loans explained.
Bridge loans
Bridge loans buy speed, not permanence. A bridge loan is short-term financing — typically 12 to 24 months — used to close quickly on a purchase, reposition a property, or compete with cash offers, with the plan to refinance or sell before the term ends.
Underwriting centers on the asset and your exit: the property’s value, your equity in the deal, and a credible plan to repay through sale or permanent refinancing. Payments are usually interest-only, and pricing runs higher than long-term debt — the premium you pay for certainty and speed.
Mortava’s bridge loans go up to 80% LTV and $5M with a 12-month term, no prepayment penalty, and a 620+ FICO minimum, and can close in as little as 5 to 10 days on a complete file. The no-prepay structure matters: if your exit arrives in month three, you aren’t penalized for paying off early.
Fix-and-flip financing
Fix-and-flip loans finance the purchase and the renovation in a single facility. Lenders underwrite against the after-repair value (ARV) and the rehab budget, then release renovation funds in draws as work is inspected and completed.
Two numbers drive the structure: loan-to-cost (how much of your total purchase-plus-rehab budget the lender funds) and the ARV cap (a ceiling based on what the finished property should be worth). Terms typically run 6 to 18 months, and experienced flippers generally qualify for higher leverage than first-timers.
Mortava funds fix-and-flip loans up to 95% of total cost with 100% of the rehab budget financed, loan amounts up to $5M, and a 620+ FICO minimum — with term sheets in as little as 2 hours and renovation draws funded within 24 hours. Lite and Heavy renovation tiers match the loan to the scope of work; the 95% LTC fix-and-flip guide breaks down how leverage tiers are earned.
New-construction loans
New-construction loans fund ground-up builds in stages rather than a lump sum. The lender approves the total project budget — land, hard costs, soft costs, and often an interest reserve — then releases funds through inspected draws as construction milestones are hit.
Qualification looks at the project as much as the borrower: approved plans and permits, a realistic budget, the builder’s track record, and a clear exit. The two standard exits are selling the finished home or refinancing into long-term debt — a common play is pairing a construction loan with a DSCR refinance at completion, converting the build into a stabilized rental in one motion.
Mortava offers ground-up new-construction loans as part of its business-purpose lineup for investors and builders, with the same soft-credit quoting process as its other programs.
Portfolio and blanket loans
Portfolio loans — often called blanket loans — finance multiple properties under a single note. Instead of ten separate mortgages with ten payments, ten sets of closing costs, and ten renewal dates, a blanket structure consolidates the portfolio into one loan secured by all of the properties together.
Qualification is driven by the combined cash flow of the portfolio rather than any single property, which lets strong performers carry weaker ones. Well-structured blanket loans include release provisions, so you can sell one property out of the pool without refinancing the whole loan.
Mortava’s blanket portfolio loans serve investors consolidating existing rentals or acquiring several properties in one transaction. Release clauses, cross-collateralization mechanics, and structuring trade-offs are covered in the cross-collateralization and blanket loan guide.
Jumbo loans and small-balance commercial
Jumbo loans finance homes above conforming loan limits; small-balance commercial loans finance properties that fall outside 1-4 unit residential entirely. Both sit at the edges of the standard investor toolkit.
A jumbo loan is consumer financing for a home priced above the FHFA conforming caps. Expect full income documentation, strong credit, and meaningful reserves. Mortava does not offer consumer jumbo mortgages — consumer-direct inquiries are referred to a Mortava partner — but investors buying high-value rentals can finance up to $3.5M through DSCR with no personal income documentation at all.
Small-balance commercial covers 5+ unit apartment buildings, mixed-use, and other commercial property, underwritten on net operating income and sponsor strength, often with balloon maturities. For 5-9 unit residential buildings specifically, Mortava’s DSCR 5-9 unit program offers a residential-style alternative: a 1.15x minimum DSCR, up to 75% LTV, loan amounts from $350K to $2.5M, and closing in a domestic LLC for experienced investors.
Cash-out refinance as a capital strategy
A cash-out refinance turns equity in one property into the down payment on the next. Rather than saving a fresh down payment for every acquisition, investors recycle capital: refinance a property that has appreciated or been renovated, pull out proceeds, and redeploy them into the next purchase.
This is the engine of the BRRRR method — buy, rehab, rent, refinance, repeat — where a renovated rental is refinanced at its new value to recover most of the cash invested. The BRRRR method guide walks through the full cycle, including where deals most often stall.
Mortava supports the strategy with DSCR cash-out refinancing up to approximately 80% CLTV on 1-4 unit rentals, and up to 70% LTV with a $500K cash-out cap on 5-9 unit properties. Because the new loan qualifies on the property’s rent, pulling capital out doesn’t hinge on your personal tax returns.
Where Mortava fits
Mortava is a direct lender for business-purpose loans to real estate investors, lending in all 50 states. The lineup covers most of the strategies in this guide: DSCR rental loans for 1-4 unit properties, DSCR for 5-9 unit multifamily, fix-and-flip with Lite and Heavy renovation tiers, bridge loans, ground-up new construction, blanket portfolio loans, and Airbnb/STR DSCR.
Quotes start with a soft credit inquiry — no hard pull — and indicative term sheets are generated through Vesty, Mortava’s AI review, with manual approval after submission. Consumer-direct borrowers financing a home they’ll live in are referred to a Mortava partner. Nothing here is a commitment to lend; final terms depend on full underwriting. Request a term sheet to see where your deal stands.
Build an indicative term sheet in minutes — soft credit inquiry only, subject to underwriting review.
Frequently asked questions
Editorial content. Mortava is a direct lender for business-purpose loans to real estate investors; where Mortava programs appear in a comparison, that inclusion is disclosed. Programs, rates, and guidelines change without notice, nothing here is a commitment to lend, and any terms shown are subject to underwriting review.