How to Buy Your First Investment Property in 2025: A Step-by-Step Guide
2. Establish a Budget for Realistic Investments
Determining how much you can afford to invest is one of the most crucial first stages. Keep in mind that purchasing an investment property entails expenses beyond the mortgage.
Take into account:
For investment loans, the down payment is typically between 15% and 25%.
Closing expenses (2–5% of the purchase price)
Reserves for upkeep and repairs
Insurance and property taxes
Possible costs for property management
Pro tip: Before making a commitment, calculate your monthly cash flow using an investment property calculator.
3. Examine Your Financing and Credit Options
You will require financing unless you are paying with cash. Additionally, the standards for investment houses are frequently more stringent than those for personal residences.
What lenders usually search for in 2025 is as follows:
At least a 680 credit score (the higher, the better)
A ratio of debt to income less than 43 percent
a track record of steady work and income
Evidence of reserves, or money to cover costs for at least six months
Common forms of financing:
Traditional mortgage loans
FHA (if you live there and hack a house)
Private lenders or portfolio loans
Prior to selecting a lender, compare terms and interest rates.
