One of the biggest barriers for new real estate investors is understanding how to finance their first deal. Below is a breakdown of the most common options — from conventional loans to creative financing strategies.

1. Conventional Loans

• Requires 15–25% down for investment properties
• Lower rates and fixed terms available through banks or credit unions
• Best for well-qualified borrowers with W2 income

2. FHA Loans (for House Hacking)

• As little as 3.5% down
• Must live in one unit of the duplex/triplex for at least 1 year
• Great way to get started with minimal capital

3. DSCR Loans (Investor-Friendly)

• Loan based on the property’s cash flow — not your personal income
• Requires higher down payment (usually 20–30%)
• Often used by full-time investors or LLCs

4. Hard Money Loans (for BRRRR or Flips)

• Short-term, high-interest loans based on asset value
• Used for fast closings, rehabs, and refinance strategies
• Make sure your exit strategy is clear (refi or sell)

5. HELOC or Cash-Out Refi

• Tap into home equity to fund a down payment
• Only recommended if you’re comfortable with the risk
• Watch interest rates — HELOCs are often variable

6. Partnering or Creative Financing

• Joint ventures where one person brings the money, the other brings the hustle
• Seller financing, lease options, or subject-to deals (advanced)
• Requires legal agreements and clear expectations

Fairmeadow Capital’s first deal used a 25% down conventional loan. As we grow, we plan to leverage both DSCR and short-term renovation financing. The best loan is the one that fits your strategy and risk tolerance.