# First-Time Investors Can Buy Rental Property Without 20% Down
First-time real estate investors often believe they need 20% down to buy a rental property. That's not true. Three legitimate funding paths exist for buyers with smaller reserves.
**Conventional loans with lower down payments** remain available. Many lenders approve conventional mortgages on rental properties with 15% down instead of 20%. Some programs go lower to 10% down, though rates climb and private mortgage insurance kicks in. Borrowers qualify based on debt-to-income ratios, credit scores, and cash reserves. The math still works if your rental income covers the mortgage, taxes, insurance, and maintenance.
**FHA loans** technically apply to owner-occupied properties, but savvy investors buy a duplex, triplex, or fourplex as their primary residence, live in one unit, and rent the others. FHA loans require just 3.5% down on these multifamily properties. After a year or two, investors move out and refinance as a pure investment property or buy another property the same way. This strategy compresses the down payment barrier significantly.
**Portfolio loans and private lenders** offer flexibility that conforming lenders don't. Portfolio lenders keep mortgages on their own books rather than selling them to Fannie Mae or Freddie Mac. They approve with 15% to 25% down, higher interest rates, and shorter loan terms. Private money comes from individuals or hard money companies. Rates run 8% to 12%, but these lenders fund deals in weeks without verifying employment or running credit checks as rigorously.
The real barrier isn't always capital. Many first-time investors save aggressively for the down payment while ignoring closing costs, inspections, appraisals, and reserves. A $200,000 rental property needs