THE SHORT ANSWER
To buy a single-family investment property in Texas with a conventional loan, plan on at least 15% down. For a duplex, triplex or fourplex, the minimum jumps to 25% down. Those limits come straight from Fannie Mae’s Eligibility Matrix (August 5, 2026), which most conventional lenders follow. But conventional isn’t the only route. Some non-QM (non-traditional) investor programs go as low as 10% down on a single-family rental and 15% on 2-4 units, with no mortgage insurance. We cover those below.
Conventional investment loan | Max loan-to-value | Minimum down payment |
Purchase, 1 unit | 85% | 15% |
Purchase, 2-4 units | 75% | 25% |
Cash-out refinance, 1 unit | 75% | 25% equity stays in |
Cash-out refinance, 2-4 units | 70% | 30% equity stays in |
However, the down payment is only part of the cash you need. Closing costs and required reserves come on top of it. So most investors need noticeably more than 15% in the bank to close a conventional rental purchase.
The good news? Conventional financing is one option, not the only one. Below, we break down the real cash total, explain where non-QM loans fill the gaps, and then show five ways Texas investors get into deals with far less money down.
Why investment properties need more down than your home
If you bought your own home with 3% or 5% down, 15% can feel like a jump. Here’s the reason. Under the same Fannie Mae matrix, a 1-unit primary residence can go up to 97% loan-to-value. An investment property tops out at 85%.
Lenders view rentals as higher risk. When money gets tight, borrowers tend to protect the roof over their own head first. As a result, lenders ask investors to keep more equity in the deal from day one.
There’s also a monthly cost to going in at the 15% minimum. Fannie Mae and Freddie Mac require mortgage insurance on any conventional loan above 80% loan-to-value. It’s added to your payment every month. That’s why many investors put 20% down instead: it avoids mortgage insurance and lowers the monthly payment.
Tip for first-time investors: a 2-4 unit property you live in counts as a primary residence. Fannie Mae allows up to 95% loan-to-value on those, which means as little as 5% down. Live in one unit, rent the others, and you’ve started a portfolio.
What else a conventional lender checks
The down payment gets you in the door. After that, a conventional lender looks at four more things.
- Reserves. Fannie Mae requires six months of reserves on an investment property purchase, per Selling Guide B3-4.1-01. Reserves cover principal, interest, taxes, insurance and HOA dues. If you already own other financed properties, you also need extra reserves of 2% to 6% of their combined loan balances (not counting the property you’re buying or your own home), depending on how many you own.
- Personal income. Conventional loans qualify you on your own income and debt-to-income ratio. That means W-2s, tax returns and pay stubs. For a new rental, lenders generally count only 75% of the lease or market rent to allow for vacancy and upkeep, according to Fannie Mae’s rental income rules.
- Credit. Fannie Mae dropped its hard 620 minimum score. Still, individual lenders and mortgage insurers can set their own minimums. A stronger score generally means better pricing or more options.
- The 10-property cap. When you finance an investment property through Desktop Underwriter (DU, Fannie Mae’s automated approval system), you can have no more than ten financed properties, per Selling Guide B2-2-03. A duplex counts as one property, and your own home counts toward the ten. Married couples can stretch this: if each spouse buys rentals in their own name only, each can finance nine rentals plus the home they share, for ten apiece. Once you hit that ceiling, conventional financing is off the table for your next rental.
In short, conventional loans work best for investors with documented income, solid reserves and a move-in-ready property. When you qualify, it’s usually the lowest-cost option: lower rates than most investor loans and no prepayment penalty (a fee for paying off or refinancing early).
When conventional doesn’t fit: non-QM investor loans
Conventional loans follow strict Fannie Mae and Freddie Mac rules. Plenty of strong investors don’t fit them. That’s not because they’re risky; it’s because their income, entity or portfolio doesn’t fit the conventional box. Non-QM (non-qualified mortgage) loans are built for exactly that. They use other ways to verify you can repay.
Non-QM rates usually run higher than conventional, and many programs carry a prepayment penalty. In exchange, you get flexibility, and taking a prepayment penalty can often buy your rate down.
If conventional says no because… | The non-QM answer |
Your tax returns show low income after write-offs | Bank statement loan: qualifies on 12-24 months of deposits instead of tax returns |
You want the property’s rent to qualify, not you | DSCR (debt service coverage ratio) loan: qualifies on the property’s rent versus its payment |
You already have 10 financed properties | DSCR: not subject to Fannie Mae’s 10-property cap |
You want to close in your LLC | DSCR or a conventional-style investor loan (one that follows Fannie Mae and Freddie Mac underwriting) |
You want 10% down without mortgage insurance | Conventional-style investor loan: up to 90% loan-to-value with no mortgage insurance |
It’s a short-term rental | Short-term rental DSCR: qualifies on projected nightly rental income |
You have strong assets but little income on paper | Asset-based loan: qualifies on your liquid assets |
What it really takes: a $300,000 Houston rental
Let’s put real numbers on it. Say you’re buying a $300,000 single-family rental in Houston with a conventional loan at the 15% minimum. You’d need roughly $68,600 in documented funds, not $45,000.
Item | Amount | How it’s figured |
Down payment (15%) | $45,000 | $300,000 × 15% |
Closing costs | $9,000 | Illustrative 3% of price |
Six months of reserves | $14,640 | 6 × $2,440 monthly payment |
Total cash to show | $68,640 |
The $2,440 monthly payment assumes a $255,000 loan at an illustrative 7.25% rate ($1,740 principal and interest), plus $500 a month in property taxes and $200 a month in insurance. Mortgage insurance would add more on top.
A quick note on Texas property taxes. Statewide, Texas property taxes average roughly 1.4% of value for owner-occupied homes, per this 2026 summary. Rentals don’t get the homestead exemption, though. That’s why this example uses 2.0%. Always check your county appraisal district for the actual rate.
Reserves don’t get spent at closing; they just have to be in your account. Even so, that’s capital you can’t put toward your next deal. On a $400,000 fourplex, the 25% down payment alone would be $100,000.
*Rate, closing cost, tax and insurance figures above are illustrative assumptions, not quotes. Run your own deal through the Catalyst Deal Analyzer for a closer estimate.
5 ways to put down less (or nothing) on your next Texas rental
So what if $68,000 isn’t sitting in your account right now? Or what if the deal you found needs work and won’t pass a conventional appraisal? That’s where investor-focused financing comes in. Catalyst Funding offers all of the options below in-house, alongside conventional loans.
This is the strongest play for buying below market. With Catalyst’s 100% loan-to-cost financing, the loan covers the purchase price and the renovation budget on qualifying deals. To qualify, purchase plus rehab needs to stay within 75% of the after-repair value (ARV).
Here’s a quick example. You buy a distressed house for $180,000 and budget $40,000 for repairs. The finished home appraises at $300,000. Your total cost of $220,000 is 73% of ARV, so the deal can qualify for 100% financing.
You still cover closing costs, origination points (upfront lender fees), reserves and the startup funds to get your contractor going. Rehab money is then released in draws as work is completed. Even so, your cash in is a fraction of a 15% down payment. Plus, Catalyst closes hard money loans in five days on average.
- DSCR loans: qualify on the rent, not your paycheck
Once the property is renovated, you refinance out of hard money into a long-term DSCR loan. A DSCR loan qualifies on whether the property’s rent covers its payment, not on your tax returns. Most DSCR programs require 20% to 25% down on a purchase, but Catalyst can go as low as 15%.
At 15%, that matches the conventional minimum, and unlike conventional, DSCR has no 10-property cap and doesn’t need W-2 income. That makes it a strong fit for self-employed investors and anyone scaling a portfolio. Catalyst Funding handles the DSCR take-out (that long-term refinance) in-house and starts working on it during your rehab, so you’re not paying hard money interest longer than you need to.
- Conventional-style investor loans: 10% down, no mortgage insurance
Have documented income but don’t want to pay mortgage insurance at 15% down? A conventional-style investor program can bridge the gap. It’s a non-QM loan that follows the same automated underwriting findings (Fannie Mae’s DU or Freddie Mac’s LP) as a conventional loan for income and assets. But it allows up to 90% loan-to-value on a single-family rental and 85% on 2-4 units, with no mortgage insurance. Like conventional, it’s limited to 10 financed properties.
Loan amounts run from $100,000 up to $1.5 million, you can close in an LLC, and an optional prepayment penalty can improve your rate. On the $300,000 Houston rental above, that’s $30,000 down instead of $45,000.
- Bank statement loans: for self-employed investors
If you’re self-employed, your tax returns probably undersell what you earn after write-offs. A bank statement loan uses 12 or 24 months of personal or business deposits to calculate your income instead. Investment property down payments start at 15%, though most lenders require 20%, and these loans aren’t subject to Fannie Mae’s 10-property cap.
- A HELOC on a property you already own
You might already have your down payment. It’s just tied up as equity. Catalyst’s HELOC (home equity line of credit) on Texas investment properties goes up to 90% combined loan-to-value (all loans on the property compared to its value), uses a faster desktop appraisal, and can close in as little as 3 to 5 days.
For example, take a $300,000 rental with a $150,000 mortgage. At 90% combined loan-to-value, that’s up to $120,000 in available credit. That’s enough to cover the down payment, closing costs and reserves on the $300,000 conventional purchase above. Your existing low-rate first mortgage stays untouched. Just keep in mind that the funds need to be drawn and in your account before closing, and a conventional lender will count the HELOC payment as debt when it calculates your ratios.
On a primary residence, Texas law caps all home equity borrowing at 80% combined loan-to-value. That cap applies to homesteads only, which is why investment property HELOCs can go higher.
*All Catalyst Funding terms are current as of publishing and subject to change.
Which loan fits your situation?
The right loan depends less on the property and more on you: your income, your cash, and your strategy. Use this table to find your starting point.
Loan | Typical cash down | Qualifies on | Best fit for |
Conventional | 15% (1 unit), 25% (2-4 units) | Personal income and DTI (debt-to-income ratio) | W-2 earners buying move-in-ready rentals, under 10 financed properties |
DSCR (non-QM) | As low as 15%; typically 20%-25% | Property’s rental income | Self-employed investors and anyone scaling past 10 properties |
Conventional-style investor (non-QM) | 10% (1 unit), 15% (2-4 units), no MI | Personal income and assets through DU/LP | Investors under 10 financed properties who want low down, no MI or an LLC closing |
Bank statement (non-QM) | 15% minimum; most lenders require 20% | 12-24 months of bank deposits | Self-employed investors whose tax returns understate income |
100% financing (hard money) | $0 down on qualifying deals; you cover closing costs, points and reserves | The deal and its ARV | Fix-to-rent, BRRRR (buy, rehab, rent, refinance, repeat) and fix-and-flip investors buying below market |
HELOC on an existing rental | Funds your down payment from equity | Equity in a property you own | Investors with equity who want to keep a low-rate first mortgage |
You can also stack these. For example, a HELOC on an existing rental covers closing costs and reserves, 100% financing funds the purchase and rehab, and a DSCR loan takes it long-term. That’s a full acquisition with very little of your own cash tied up.
Frequently asked questions
What is the minimum down payment for an investment property in Texas?
With a conventional loan, the minimum is 15% for a 1-unit property and 25% for 2-4 units. With 100% financing from a lender like Catalyst Funding, qualifying fix-to-rent deals can close with no down payment, though you still pay closing costs, points and reserves. Conventional-style investor programs, a non-QM option, go as low as 10% down on a single-family rental.
Can I put 10% down on a rental property with a conventional loan?
No. Fannie Mae caps investment property purchases at 85% loan-to-value, so 15% is the floor for a single-family rental. The exception is a 2-4 unit property you live in, which counts as a primary residence and can go as low as 5% down. However, conventional-style investor programs (non-QM loans that use the same automated underwriting) allow 10% down on a single-family rental with no mortgage insurance.
Do I need 20% down to avoid mortgage insurance on a rental?
On a standard conventional loan, yes. Conventional loans above 80% loan-to-value require mortgage insurance. Putting 20% down removes that cost and lowers your monthly payment. The exception is our conventional-style investor program, which goes up to 90% loan-to-value with no mortgage insurance.
How much cash do I need in total to buy a $300,000 rental in Texas?
With a conventional loan at 15% down, plan on roughly $68,000 to $70,000. That covers the $45,000 down payment, closing costs and six months of reserves. With our conventional-style investor program at 10% down, the down payment drops to $30,000, so plan on roughly $54,000 to $56,000. Your actual number depends on your rate, taxes and insurance.
Can I use a HELOC for the down payment on an investment property?
Yes. Catalyst’s HELOC on Texas investment properties goes up to 90% combined loan-to-value and can close in as little as 3 to 5 days. A conventional lender will count the HELOC payment in your debt-to-income ratio.
What if I already own 10 financed properties?
Conventional financing stops at ten financed properties. DSCR loans don’t have that cap, which makes DSCR the natural next step for a growing portfolio.
Can I get an investment property loan without tax returns?
Yes. DSCR loans qualify on the property’s rent, and bank statement loans qualify on 12 to 24 months of deposits. Both are non-QM loans built for investors and self-employed borrowers.
What is a non-QM loan, and is it riskier?
Non-QM simply means the loan verifies your ability to repay in ways that fall outside the standard Fannie Mae and Freddie Mac rules, like rental income or bank statements. It doesn’t mean subprime. Many non-QM borrowers have high credit scores and strong assets; their income or portfolio just doesn’t fit the conventional box. Expect a somewhat higher rate than conventional in exchange for that flexibility.
Find out what you can buy with the cash you have
Fifteen percent down is the conventional rule. It doesn’t have to be your limit. The fastest way to know your real number is to talk it through with a lender who does conventional, non-QM, DSCR, hard money and HELOCs under one roof.
Catalyst Funding can provide the perfect financial solution for your investment needs.
Whether you’re investing in Houston, Dallas, San Antonio, Austin, or any other area in Texas, we’ve got you covered!
Turn hesitation into a plan with Catalyst Funding
Catalyst Funding has financed real estate investors in Houston, Dallas, San Antonio and Austin since 2014. Our team includes active investors who have faced these same fears on their own projects. The loan officers are also passionate about being trusted advisors. We offer hard money, 100% financing on qualifying deals, HELOCs, cash-out refinances, and conventional or DSCR loans, all in-house, with one dedicated loan officer from start to finish.
With nearly 1,000 reviews averaging 4.9 stars and a five-day average close, we focus on several things: amazing communication, being a trusted advisor, being highly responsive, and making sure your deal doesn’t fall apart.
If fear has kept you out of the market this year, challenge yourself to look at challenges as opportunities. The most successful investors don’t follow the trends, they are confident in setting them.
*All loan programs are subject to borrower qualification, property eligibility, and underwriting approval. Terms are current as of publication and subject to change.
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