# Funding Your First Rental Without 20% Down
The biggest obstacle for first-time rental property buyers isn't market conditions or competition. It's the belief that you need 20 percent down to close a deal.
You don't. Three legitimate financing paths exist for investors who lack substantial cash reserves.
**FHA Loans for Investment Properties**
FHA financing allows borrowers to put down as little as 3.5 percent on an owner-occupied property. Some lenders extend FHA terms to investment properties when the investor occupies one unit in a multi-unit building. A duplex, triplex, or fourplex works. This strategy lets you house-hack, live rent-free or nearly so, and let tenants cover your mortgage. You'll pay mortgage insurance, and rates run slightly higher than conventional loans, but you eliminate the down payment barrier.
**Conventional Loans with Lower Down Payments**
Many conventional lenders accept 10 to 15 percent down on investment properties. Your credit score, debt-to-income ratio, and reserve funds matter more than hitting 20 percent. Loan-to-value ratios of 85 to 90 percent carry higher rates and require PMI, but they're available. Shop multiple lenders. Standards vary widely.
**Hard Money and Private Lenders**
Hard money lenders prioritize the property, not your credit history. They'll finance 65 to 75 percent of the purchase price on a short-term basis, typically one to three years. You'll cover the gap with your down payment, often 25 to 35 percent. Interest rates run 8 to 12 percent annually, and fees add another 2 to 5 percent. This option suits fix-and-flip deals or bridge financing while you refinance into a traditional loan. Cost runs