Financing Options
Choosing how to finance a real estate investment is one of the most important decisions before buying a property.
Each loan type works differently. Some are better for investors who want to renovate and resell quickly. Others are better for rental properties, long-term ownership, or investors who already have equity in another property.
The goal of this section is to help investors understand the most common financing options used in Florida, in simple terms.
Fix & Flip Loan
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A Fix & Flip loan is commonly used when an investor wants to buy a property, renovate it, and sell it for a profit.
This type of loan is usually short-term because the goal is not to keep the property for many years. The lender will usually look at the purchase price, the renovation budget, and the estimated value of the property after repairs, also called the ARV.
Things to know:
• Down payment is commonly around 10%–20%.
• Experienced investors may qualify for lower requirements.
• Loan terms are usually short, often around 6–18 months.
• Interest rates and fees vary by lender.
• The loan may help cover both the purchase and renovation budget.
• Good credit is generally expected.
• Personal income or W-2 income is often not the main requirement.
• The deal must make sense based on the projected ARV.
• A rehab contingency is recommended in case renovation costs increase.
Best for: Investors who want to renovate and resell the property quickly.
A Fix & Flip loan is commonly used when an investor wants to buy a property, renovate it, and sell it for a profit.
This type of loan is usually short-term because the goal is not to keep the property for many years. The lender will usually look at the purchase price, the renovation budget, and the estimated value of the property after repairs, also called the ARV.
Things to know:
• Down payment is commonly around 10%–20%.
• Experienced investors may qualify for lower requirements.
• Loan terms are usually short, often around 6–18 months.
• Interest rates and fees vary by lender.
• The loan may help cover both the purchase and renovation budget.
• Good credit is generally expected.
• Personal income or W-2 income is often not the main requirement.
• The deal must make sense based on the projected ARV.
• A rehab contingency is recommended in case renovation costs increase.
Best for: Investors who want to renovate and resell the property quickly.
DSCR Loan
DSCR Loan
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A DSCR loan is commonly used for rental properties.
DSCR stands for Debt Service Coverage Ratio. In simple terms, the lender looks at whether the property’s rental income can cover the mortgage payment.
This type of loan is helpful for investors because the focus is usually on the property’s income, not only the borrower’s personal job income.
Things to know:
• Qualification is based mainly on the property’s cash flow.
• Personal income or W-2 income is generally not required.
• The loan amount depends on how much income the property can produce.
• It can be used for short-term, mid-term, or long-term rentals, depending on the lender.
• A primary residence is not a standard requirement.
• Interest rates vary depending on the market, lender, property, and borrower profile.
Best for: Investors who want to hold a rental property and qualify based on rental income instead of traditional employment income.
A DSCR loan is commonly used for rental properties.
DSCR stands for Debt Service Coverage Ratio. In simple terms, the lender looks at whether the property’s rental income can cover the mortgage payment.
This type of loan is helpful for investors because the focus is usually on the property’s income, not only the borrower’s personal job income.
Things to know:
• Qualification is based mainly on the property’s cash flow.
• Personal income or W-2 income is generally not required.
• The loan amount depends on how much income the property can produce.
• It can be used for short-term, mid-term, or long-term rentals, depending on the lender.
• A primary residence is not a standard requirement.
• Interest rates vary depending on the market, lender, property, and borrower profile.
Best for: Investors who want to hold a rental property and qualify based on rental income instead of traditional employment income.
Private Money
Private Money
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Private money is financing provided by an individual investor or a private lending group instead of a traditional bank.
This option can be more flexible because the terms are negotiated directly with the lender. It is often used when the investor needs to move quickly or when the project does not fit traditional lending requirements.
Things to know:
• Down payment is commonly around 20%, but it varies.
• Income verification is generally not the main requirement.
• The structure may be similar to a Fix & Flip loan.
• Underwriting is usually more flexible.
• Rates, fees, timelines, and repayment terms vary widely.
Best for: Investors who need flexible financing or faster approvals.
Private money is financing provided by an individual investor or a private lending group instead of a traditional bank.
This option can be more flexible because the terms are negotiated directly with the lender. It is often used when the investor needs to move quickly or when the project does not fit traditional lending requirements.
Things to know:
• Down payment is commonly around 20%, but it varies.
• Income verification is generally not the main requirement.
• The structure may be similar to a Fix & Flip loan.
• Underwriting is usually more flexible.
• Rates, fees, timelines, and repayment terms vary widely.
Best for: Investors who need flexible financing or faster approvals.
HELOC
HELOC
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A HELOC is a Home Equity Line of Credit.
This option uses the equity in a property the investor already owns. Instead of applying for a new investment loan first, the investor may use available equity from an existing home to help fund a down payment, renovation, or another investment.
Things to know:
• It is based on equity in a property already owned.
• It can be used for down payments or renovation costs.
• It gives flexible access to funds as needed.
• Approval depends on the lender, equity available, credit profile, and income.
Best for: Investors or homeowners who already own property and have built up equity.
A HELOC is a Home Equity Line of Credit.
This option uses the equity in a property the investor already owns. Instead of applying for a new investment loan first, the investor may use available equity from an existing home to help fund a down payment, renovation, or another investment.
Things to know:
• It is based on equity in a property already owned.
• It can be used for down payments or renovation costs.
• It gives flexible access to funds as needed.
• Approval depends on the lender, equity available, credit profile, and income.
Best for: Investors or homeowners who already own property and have built up equity.
Second Home Loan
Second Home Loan
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A Second Home Loan is typically used when someone is buying a property as a second residence, not as their primary home.
This is different from a rental investment loan because the lender usually expects the buyer to personally use the property for part of the year and meet conventional loan requirements.
Things to know:
• Down payment is commonly around 20%–25%.
• Income and employment documentation are required.
• A primary residence is generally required.
• It is a conventional loan product for a non-primary residence.
• The property may be subject to occupancy and usage rules from the lender.
Best for: Buyers who already own a primary residence, have documented income, and want to purchase a second home.
A Second Home Loan is typically used when someone is buying a property as a second residence, not as their primary home.
This is different from a rental investment loan because the lender usually expects the buyer to personally use the property for part of the year and meet conventional loan requirements.
Things to know:
• Down payment is commonly around 20%–25%.
• Income and employment documentation are required.
• A primary residence is generally required.
• It is a conventional loan product for a non-primary residence.
• The property may be subject to occupancy and usage rules from the lender.
Best for: Buyers who already own a primary residence, have documented income, and want to purchase a second home.
Note About DSCR Loans
A DSCR loan does not normally require the borrower to own a primary residence. This is a common misconception.
The main focus is whether the property’s rental income can support the mortgage payment. That is why DSCR loans are often attractive to investors who may not have traditional employment income but are buying a property that can generate rental income.
Note About DSCR Loans
A DSCR loan does not normally require the borrower to own a primary residence. This is a common misconception.
The main focus is whether the property’s rental income can support the mortgage payment. That is why DSCR loans are often attractive to investors who may not have traditional employment income but are buying a property that can generate rental income.
Important Disclaimer
Financing terms, interest rates, down payment requirements, fees, and approval criteria vary by lender, market conditions, borrower qualifications, property type, and investment strategy. Investors should always speak with a licensed mortgage professional, lender, CPA, or financial advisor before choosing a financing option.