Investment property loans in Florida: conventional investor financing with 15–25% down, plus DSCR loans that qualify on the property’s rental income — not your pay stubs. Mortgage Broker Douglas Wilkerson explains reserves, rates & investor strategy.
Investment financing splits into two worlds. Conventional investor loans follow Fannie Mae/Freddie Mac guidelines — they underwrite you (income, debts, credit) and count the property’s rent as an offset. DSCR loans (debt-service coverage ratio) underwrite the property — if the rent covers the mortgage, your personal income barely matters. Which path fits depends on your tax returns, your portfolio size, and how the property cash-flows.
In plain English: W-2 employee buying your first rental? Conventional usually wins. Self-employed with complicated taxes, or buying your fifth door? DSCR was built for you.
| Feature | Fannie Mae / Freddie Mac Guideline |
|---|---|
| Down payment | 15% on 1-unit (with PMI above 80% LTV); 25% on 2–4 units |
| Credit | 620 minimum; 680–720+ for competitive pricing |
| Reserves | 6 months of payments per financed property (scales with portfolio size) |
| Rental income | 75% of market rent (per appraisal) can offset the mortgage payment in DTI |
| Property types | 1–4 unit residential; condos per project standards |
| Loan limits | Conforming limits apply ($832,750 one-unit baseline, 2026) |
The pricing reality: investment properties carry meaningful loan-level price adjustments — expect rates roughly 0.5% to 1%+ above primary-residence pricing for the same borrower, driven by LLPAs for investment occupancy. That’s the agencies’ risk pricing, and every lender passes it through. Shopping still matters: LLPA markups on top of the agency adjustments vary by lender.
The 75% rent rule: the appraiser estimates market rent, the lender credits 75% of it (the 25% haircut accounts for vacancy and maintenance), and that net figure offsets the property’s mortgage payment in your debt-to-income ratio. Strong rents can make the property nearly DTI-neutral.
A DSCR loan asks one central question: does the property’s rent cover its mortgage payment? The debt-service coverage ratio is monthly rent divided by the monthly PITIA payment. A DSCR of 1.0 means rent exactly covers the payment; 1.25 means rent covers it with 25% cushion.
DSCR is also the go-to structure for short-term rentals in Florida’s vacation markets — many DSCR lenders accept Airbnb-style income with 12 months of history or market-rent projections.
Down payment. On a $350,000 Jacksonville rental: 15% down conventional is $52,500 (PMI required above 80% LTV); 20–25% down DSCR is $70,000–$87,500. Investment down payments can’t be gifts the way primary-residence ones can — plan on your own funds.
Reserves. This is where investors get surprised: 6 months of payments per financed property is standard on conventional, and requirements scale as your portfolio grows. On your third rental, you’re documenting serious liquidity. DSCR lenders typically want 6 months on the subject property.
Rates and fees. Investment pricing runs higher across the board — LLPAs on conventional, non-QM premiums on DSCR. Origination and underwriting fees are comparable to primary loans, but don’t expect primary-residence rates on a rental. Anyone promising you otherwise is selling something.
Cash flow math. Before you buy, Douglas will walk the real numbers: rent minus PITIA, insurance, taxes, vacancy (budget 5–10%), maintenance (5–10%), and property management (8–12% if you’re not self-managing). If it doesn’t cash-flow on paper with honest inputs, it won’t cash-flow in real life.
House hacking: buy a 2–4 unit property with an FHA (3.5% down), VA (0% down), or conventional loan, live in one unit, and let the other units cover the mortgage. It’s the highest-leverage entry into investing that exists — owner-occupied financing on an income property.
BRRRR (Buy, Rehab, Rent, Refinance, Repeat): buy distressed with a renovation loan or cash, rehab, rent, then refinance into a long-term DSCR or conventional investor loan and pull capital out for the next deal. The refinance step is where Douglas’s lender network pays for itself.
1031 exchanges: selling an investment property? A 1031 exchange defers capital gains taxes by rolling proceeds into a like-kind property — it defers, not eliminates, and the timelines (45 days to identify, 180 to close) are strict. Talk to your CPA early; Douglas coordinates the financing side.
Renovation Loans — BRRRR Funding Conventional Investor Terms
15% on a one-unit property with conventional financing (PMI required above 80% LTV); 25% on 2–4 units. DSCR loans typically require 20–25% down. Unlike primary residences, investment down payments generally must be your own funds — not gifts.
A DSCR (debt-service coverage ratio) loan qualifies you on the property’s rental income instead of your personal income — no tax returns, no W-2s, no DTI. The lender divides monthly rent by the PITIA payment; most want a ratio of 1.0–1.25. It’s ideal for self-employed borrowers and portfolio investors.
620 minimum for conventional investor loans (680–720+ for competitive pricing); typically 660–680+ for DSCR. Investment pricing is credit-sensitive, so stronger scores earn meaningfully better rates.
Expect roughly 0.5% to 1%+ above primary-residence rates on conventional investor loans due to agency LLPAs, and 1–2% above on DSCR loans. Exact spreads move with the market — get a live quote on your scenario rather than budgeting off rules of thumb.
On conventional loans, the appraiser estimates market rent and the lender credits 75% of it against the property’s mortgage payment in your DTI — the 25% haircut covers vacancy and maintenance. On DSCR loans, the rent is the qualification.
Typically 6 months of mortgage payments per financed property on conventional loans, scaling up as your portfolio grows. DSCR lenders usually require 6 months on the subject property. Reserves must be liquid — checking, savings, investments — documented with statements.
Yes — many DSCR lenders finance short-term rentals, using 12 months of STR income history or market-rent projections. Florida’s vacation markets are a core DSCR use case. Confirm the lender’s STR policy upfront; not all of them allow it.
House hacking means buying a 2–4 unit property, living in one unit, and renting the others — financed with owner-occupied loans like FHA (3.5% down) or VA (0% down). It’s the lowest-cash way into real estate investing, and the rental income can help you qualify.
Fannie Mae caps borrowers at 10 financed properties — a wall many growing investors hit. DSCR loans have no such agency cap (lender limits vary), which is why portfolio investors migrate to DSCR as they scale. Plan your financing sequence before you hit the cap, not after.
Often, yes — 3-to-5-year prepayment penalty structures (sometimes with annual step-downs) are common. Factor the penalty into your hold-vs-refinance math before signing. If you plan to refinance within a couple of years, negotiate the penalty structure or choose a different product.
Yes — financed purchases are common in 1031 exchanges. The exchange timelines are strict (45 days to identify replacement property, 180 days to close), so your financing must be lined up early. Coordinate your CPA, accommodator, and Douglas well before the sale closes.
Typically 30–45 days — similar to a primary purchase. DSCR loans can move faster since there’s no personal income underwriting; appraisal (including the rent schedule) is usually the long pole.
Answer a few quick questions and Douglas will personally price your scenario — no automated guesswork, no obligation.
No pressure, no credit pull to have the conversation — just straight answers from a Jacksonville Mortgage Broker.
Douglas Wilkerson — Mortgage Broker, NMLS #1680719
Freeman Douglas Corporation
1548 The Greens Way, Ste. 4, Jacksonville Beach, FL 32250
Direct: (904) 517-4049 · Office: (904) 906-8869
Email: [email protected]
Serving Jacksonville, Jacksonville Beach, St. Augustine, Orange Park, Fernandina Beach, and all of Duval, St. Johns, Clay, and Nassau counties — plus borrowers across Florida and additional states where licensed.
Freeman Douglas Corporation is a DBA of Edge Home Finance. This is not a promise to lend — all credit decisions are subject to approval. Douglas Wilkerson, NMLS #1680719 | Edge Home Finance, NMLS #891464. Verify licensing at nmlsconsumeraccess.org. Equal Housing Opportunity.