What financing options are available for investment properties in Minnesota?

Conventional investment property loans:

• Down payment: 20-25% minimum
• Interest rate: 0.5-1% higher than primary residence rates
• Credit score: 680+ typically required
• Best for: Experienced investors with strong credit and cash reserves

FHA loans (house-hacking):

• Down payment: 3.5% minimum
• Live in one unit, rent the other(s)
• Must occupy for at least one year
• Property must be 1-4 units
• Best for: First-time investors who want to house-hack

DSCR loans (Debt Service Coverage Ratio):

• Qualify based on the property's rental income, not your personal income
• Down payment: 20-25%
• Rate: 1-2% higher than conventional
• Best for: Investors who want to keep their personal debt ratios clean

Portfolio loans (local banks):

• Local banks and credit unions keep these in-house
• More flexible underwriting
• Relationship-based (they want your deposits too)
• Best for: Investors building a portfolio who can develop a banking relationship

The move I recommend: Start with an FHA loan on a duplex (house-hack). After a year, you can move out and keep the property as a rental. Then use conventional or DSCR financing for your next purchase.

I work with lenders who specialize in investment property financing in the Twin Cities. The right lender makes a five-figure difference over the life of the loan.