Conventional Investor Loan
Fannie Mae and Freddie Mac investor financing — sharpest pricing for properties 1–10 in your portfolio. Tier overlays tighten at 5+ properties; the 10-property cap ends the conventional path.
Quick answer
- Underwriting: traditional Fannie Mae or Freddie Mac investor guidelines. Personal income, DTI, and reserves apply.
- Max financed properties: 10 per borrower (subject + 9 others).
- Max LTV (purchase, 1-unit): 85% on properties 1–4; 75% on properties 5–10.
- Max LTV (purchase, 2–4 unit): 75% on properties 1–4; 70% on 5–10.
- Min FICO: 620 floor; 720+ realistically required for properties 5+.
- Reserves: 2 months PITIA per financed property (yes — across your whole portfolio, not just the subject).
- DTI: 45% standard; 50% on strong files.
Why investors start here
Conventional Fannie / Freddie financing has the sharpest pricing for investor purchases. If your file fits — strong FICO, clean tax returns, manageable portfolio size — there's no reason to pay for non-agency pricing.
The catch: conventional gets harder as your portfolio grows. The overlays at 5+ financed properties are real, and at 7–10 they tighten further. Many serious investors hit conventional's natural ceiling around 6–8 properties even before the 10-property cap.
Tier-by-tier requirements
| Properties owned | Max LTV (1-unit purchase) | Min FICO | Reserves |
|---|---|---|---|
| 0 (first investment) | 85% | 620–680 | 6 mo subject + 0 mo other |
| 1–3 financed | 85% | 660 | 2 mo per property |
| 4–6 financed | 75% | 720 | 2 mo per property |
| 7–10 financed | 70–75% | 720 | 2 mo per property + buffer |
| 11+ | — | — | Conventional cap reached → DSCR / Portfolio |
2–4 unit purchase max LTV is typically 75% on 1–4 financed and 70% on 5–10. Cash-out is 5–10% lower than purchase across all tiers.
The reserves math gets serious fast
Fannie Mae and Freddie Mac require 2 months of PITIA per financed property in liquid reserves — across your whole portfolio. This is the hidden hurdle most investors hit before the LTV one.
Worked example. You own 6 rentals at an average $2,200 PITIA each. Combined PITIA = $13,200/month. Reserve requirement = 2 × $13,200 = $26,400 in liquid reserves you need to show on top of the down payment for the 7th property. That number scales linearly as you add properties.
When to switch off conventional
- You're approaching 7+ properties. Overlays tighten; pricing isn't dramatically better than DSCR at this point.
- Your tax return doesn't reflect real cash flow. Self-employed investors get hit hard by Schedule C deductions on the conventional side. DSCR reads the property, not the tax return.
- You're closing in an LLC for liability. Conventional requires personal-name closing. DSCR allows LLC closing directly.
- Reserve burden is breaking your liquidity. DSCR generally requires reserves on the subject only, not your whole portfolio.
FAQ
Why does conventional cap at 10 financed properties?
Both Fannie Mae and Freddie Mac set a 10-property cap on financed 1–4 unit residential investment properties per borrower (subject + 9 others). The cap is structural to the agency programs.
Are commercial / 5+ unit properties counted toward the 10?
No — only 1–4 unit residential. 5+ unit and commercial properties don't count toward the conventional investor-property cap.
Can I refinance an existing conventional investment loan into a DSCR?
Yes. Investors do this regularly — to free up the conventional 'slot' for a new acquisition, or to LLC-title a property post-purchase.
FICO 720 minimum at 5+ properties — is that real?
Effectively yes on most files. The Fannie / Freddie matrix tightens significantly at 5+. We can sometimes push to 700 with strong compensating factors (deep reserves, low LTV).
Do you do conventional 2–4 unit investor financing?
Yes, with adjusted LTV — 75% purchase max on 1–4 financed, 70% on 5–10.
Curious if Conventional Investor Loan is the right fit?
Bring the property details — we'll model real numbers in 20 minutes.