Investment Property Lending Rates: 2025 Simple Guide

Imagine you borrow money to buy a toy and promise to pay back a little extra. That extra money is called interest – it’s the cost of borrowing. Investment property lending rates are the interest rates on loans used to buy properties you rent out for income (not the home you live in). These rates tell you how much extra you pay the lender on top of what you borrow. Investment property loans usually have higher interest rates than loans for a primary home because they are riskier for lenders (people are more likely to stop paying a rental property loan before their own home), businessinsider.com. In this simple guide, we’ll explain how these rates work, show current 2025 rate ranges for different loan types, compare rates for short-term rentals, multifamily and commercial deals, and outline why the rates differ.

2025 Investment Property Loan Rate Ranges

DSCR Loans (Debt Service Coverage Ratio): DSCR loans are special for real estate investors. Instead of your personal income, the lender looks at the property’s rental income to ensure it can cover the loan payments. In 2025, DSCR loan interest rates are typically between 6.5% and 8.5%, roughly 7%–8% for many borrowers.

Conventional Investment Property Loans: A traditional loan is a standard mortgage from a bank. Conventional 30-year fixed rates for investment properties are around 6.5% to 8.5%blog.lending.groundfloor.com. This is usually about 0.5% to 0.75% higher than the rate on an owner-occupied home loan. In 2025, many borrowers see rates in the 7% range for these loans.

Commercial Hard Money Loans: Hard money loans are the “fast cash” option for real estate deals. These come from private lenders and are used for short-term needs (for example, a fix-and-flip or bridge loan). Because they are short-term and riskier, hard money interest rates are higher. In 2025, hard money loan rates often start around 9% and can go up to 12%–15% for riskier deals. These loans cost more in interest, but they can be handy if you need quick funding or don’t qualify for a bank loan.

Need help finding a good rate? Visit our financing page to compare offers from different lenders.

Comparing Rates: Short-Term Rentals vs. Multifamily vs. Commercial

• Short-Term Rental Properties: Loans for vacation rentals (Airbnb-type properties) can have slightly higher rates. A short-term rental loan might be about 0.5% to 1% higher than a similar loan for a long-term rental home abroad because the income can be inconsistent.

• Multifamily Properties: Lenders sometimes charge more interest for multi-unit buildings (duplexes, triplexes, etc.) than for single-family properties, since multi-unit properties can be a bit more complex.

• Commercial Properties: Large commercial investments (like office buildings or shopping centers) have rates that vary widely. A fully leased commercial property might get a rate similar to a residential investment loan, while a riskier or short-term commercial project could see rates well above 10%.

Why Do Rates Differ?

• Risk Level & Loan Type: Higher-risk loans come with higher rates. Investment property loans are riskier than primary home loans, carrying higher interest rates. Likewise, a hard money loan (more dangerous and short-term) will have a higher rate than a safer, long-term conventional loan.

• Property Type: Some properties are viewed as riskier than others. For example, a short-term or multi-unit property might have a higher rate than a single-family rental because its income is less predictable (businessinsider.com).

• Loan Term: Short-term loans often charge higher rates, especially when they provide quick, convenient funding (e.g., a 1-year bridge loan), northcoastfinancialinc.com. Lenders ask for more interest in return for the added risk of short-term financing.

• Borrower Profile: Your financial health matters. If you have a lower credit score or a small down payment, a lender may charge a higher rate to offset the risk. Borrowers with excellent credit and large down payments usually get lower rates.

Finding the Best Financing with Investment Property Loan Exchange

Investment Property Loan Exchange makes it easy to find the best loan rates for your investment. Fill out one quick form and get matched with multiple loan offers. You can compare interest rates from different lenders and pick the best deal. It’s free to get started – visit our financing page and see what rates you can qualify for.