Your First Investment Property: A Financing Roadmap
Your first rental is as much a financing decision as a property decision. Here's the roadmap, from budget to closing.
Short answer
To finance your first rental, set a budget that includes the down payment, closing costs and reserves; choose a loan type, conventional if your income supports it or DSCR if you'd rather qualify on the rent; get pre-approved; then shop for properties that clear your numbers, especially the DSCR. Go in with reserves, not just a down payment.
Key points
- Budget for the down payment, closing costs and reserves.
- Choose conventional or DSCR based on how you qualify.
- Shop for properties that clear your numbers.
The roadmap
- Set your budget. Down payment, closing costs and reserves; see cash to close on a rental.
- Choose your loan type. Conventional if your income and debts support it, DSCR if you'd rather qualify on the property's rent; see DSCR loans, explained.
- Get pre-approved. Know your price range and terms before you shop.
- Screen deals fast. Run rent, payment and expenses before you fall for a property; see screening a rental deal in 15 minutes.
- Make the offer. Include the contingencies you need, especially inspection and appraisal.
- Close. Have your documents ready; see the investor loan document checklist.
Ready to start? Send your scenario and a KREC loan advisor will walk you through the next step. Talk to an advisor
Mistakes first-time investors make
- Spending everything on the down payment and keeping no reserves
- Underestimating repairs, vacancy and management
- Buying where rents don't support the payment
- Skipping the inspection to win a deal
Start with the numbers
The best first rental is usually a boring one: a property in good condition whose rent comfortably covers the payment.
Frequently asked questions
How do I finance my first rental property?
Set a budget that includes reserves, choose between a conventional loan and a DSCR loan, get pre-approved, then buy a property whose rent supports the payment.
Can a first-time investor get a DSCR loan?
Yes. Many DSCR programs are open to first-time investors, sometimes with different leverage or reserve requirements.
How much money do I need for my first rental?
Plan for the down payment, often 20 to 25% on DSCR loans, plus closing costs and several months of reserves.
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