Why Are Investment Property Mortgage Rates Higher, and What Moves Them?
Because the agencies that buy conventional loans charge more to guarantee them. The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, lists occupancy type, with investment properties as an example, among the key risk attributes for their upfront fees. Those fees are layered with others for loan-to-value, credit score and the type of refinance, and they show up in what the loan costs.
Last updated October 21, 2026What the agencies price for
FHFA's 2024 report on guarantee fees names the key risk attributes for upfront fees, including:
- Loan-to-value ratio
- Credit score
- Type of refinance, rate-and-term or cash-out
- Occupancy type, such as investment properties or second homes
- Property type, such as condominiums and multi-unit properties
Fannie Mae's Selling Guide says its loan-level price adjustments are assessed on your credit score and loan-to-value ratio, in addition to other loan features.
Why the fees stack
FHFA says upfront fees are assessed in layers, with a separate fee for each risk attribute. Its own example is a loan that is both an investment property and has a high loan-to-value ratio: it carries the fee for each, added together.
What you can change
- Your down payment. A lower loan-to-value takes away the high-loan-to-value layer. See how much down payment for an investment property.
- Your credit score. It's one of the attributes the fees are priced on.
- Rate-and-term instead of cash-out. The type of refinance is its own attribute.
- The property. Multi-unit properties and condominiums are listed as their own attributes.
The occupancy itself doesn't change: a rental is a rental. For more on the gap, see do investment properties get higher mortgage rates.
DSCR loans are priced differently
Each DSCR lender sets its own pricing; one describes its DSCR loan as a non-QM mortgage. At one lender, you can pay a higher fee or rate to reduce or remove the prepayment penalty. See prepayment penalties on a DSCR loan.
| Why higher | Investment property occupancy is a priced risk attribute for agency upfront fees |
|---|---|
| Other attributes | Loan-to-value, credit score, refinance type, property type |
| How fees combine | In layers, one per attribute, added together |
| What you control | Down payment, credit, refinance type and property type |
| DSCR loans | Priced by each lender |
Related questions
Sources
- https://www.fhfa.gov/document/gfee-report-2024.pdf
- https://selling-guide.fanniemae.com/sel/b3-5.1-01/general-requirements-credit-scores
- https://selling-guide.fanniemae.com/sel/b2-1.2-01/loan-value-ltv-ratios
- https://sf.freddiemac.com/general/maximum-ltv-tltv-htltv-ratio-requirements-for-conforming-and-super-conforming-mortgages
- https://angeloakms.com/programs/investor-cash-flow-mortgage-program/
- https://limaone.com/rental/detail/
Sourced from licensed loan officers and brokers in the FreeRateUpdate network.
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.