Finance It

You've got a market and a deal that pencils. Now: how do you pay for it? There are more routes than most first-timers realize, and picking the wrong one costs real money over the life of the loan.

The four main routes

• Conventional investment loan. Usually the cheapest rate if you qualify, but it's underwritten on YOUR income and debt-to-income ratio — and each property makes the next one harder to qualify for.
• DSCR loans. The STR investor's workhorse. The lender qualifies the PROPERTY on its projected rental income, not your personal income. Rates run somewhat higher than conventional and down payments are typically 20–25%, but self-employed investors and people scaling past a couple of properties often can't beat them.
• Second-home loans. Lower down payments are possible, but they come with occupancy requirements and rental restrictions. Misrepresenting your intent to get one is mortgage fraud — don't let anyone talk you into it.
• Portfolio/local bank loans. Banks that keep loans on their own books can be flexible on property types and situations the big lenders won't touch. Worth a call once you have a relationship or an unusual deal.

The comparison mistake: shopping on rate alone. Compare total cost of capital — rate, points, fees, prepayment penalties (common on DSCR), and how the loan affects your ability to buy property #2. Two lenders quoting the same rate can be thousands of dollars apart once fees and penalties are on the table.

One more thing: get pre-approved before you start writing offers, not after you find the house. In competitive markets, the financed buyer who moves fast beats the one still collecting documents.

Go deeper

• STR Financing Options in 2026
• DSCR Loans for Airbnb Investors
• Financing STR Investments

ACTION: Get quotes from two DSCR lenders and one conventional lender, and compare total cost of capital — not just the rate.

Next lesson: one bad guest lawsuit can erase years of cash flow. LLCs, real STR insurance, and the legal traps first-timers never see coming.