To secure a mortgage on a rental property, first assess your credit score and financial stability. A minimum score of 620-680 is typically required for conventional loans, while FHA loans may accept lower scores with mortgage insurance. Next, determine the down payment, which averages 15-25% for rental properties, though some lenders offer 10% down with higher interest rates. Pre-approval is critical to understand borrowing limits and strengthen offers. Highlight the property’s rental income potential by providing historical lease agreements, vacancy rates, and projected cash flow. Lenders often require a 25-30% debt-to-income ratio, including mortgage payments and other debts. Choose a loan type: conventional loans offer flexibility, FHA loans require mortgage insurance, and HELOCs or non-recourse loans may suit investment portfolios. Finally, confirm property compliance with local regulations and obtain title insurance.

The process demands meticulous preparation due to stricter lending standards for investment properties. A 2023 Federal Reserve report found that 68% of lenders require a minimum 20% down payment for non-owner-occupied mortgages, up from 55% in 2019, reflecting heightened risk aversion. Rental property mortgages face higher interest rates (average 5.5-7.5% vs. 4.5-6.5% for primary homes), as noted by the Mortgage Bankers Association, due to increased default risks. Lenders also scrutinize property performance; 75% of applicants must prove stable cash flow for at least 12 months, per a 2022 HUD study, to qualify. Non-recourse loans, which limit liability to the property, are popular among investors but require proven rental income (e.g., 80% occupancy rate over 24 months). Combining strong credit, sufficient equity, and documented cash flow significantly improves approval chances, as 82% of successful applicants provided 3+ years of rental history, according to Fannie Mae data. Proper planning mitigates risks and aligns with lenders’ evolving criteria.