Investment Property Loans in Michigan for 1-4 Unit Rentals
Financing for people buying single-family rentals, duplexes, triplexes, and fourplexes across West and Mid Michigan.
What is an Investment Property Loan?
Building wealth through real estate is a proven strategy, and Treadstone Funding offers the financing tools to help you succeed in the Michigan market. Whether you are buying your first rental property in Grand Rapids or adding a duplex somewhere else in the lower peninsula, our mortgage options for 1-4 unit rental properties are built for individual buyers, not institutions.
From traditional Conventional financing to specialized DSCR (Debt Service Coverage Ratio) loans, we provide options that look at the property’s potential, not just your personal income. A mortgage on a rental property has many moving parts, and the best way to start is to talk to a professional. But for those interested in researching, keep reading.
RENTAL PROPERTY LOAN REQUIREMENTS
To qualify for a mortgage on a 1-4 unit rental property, requirements vary based on the specific program (Conventional vs. DSCR), but general guidelines include:
- Credit Score: A minimum FICO score of 620 is typically required for Conventional loans, while DSCR loans generally start at 640.
- Down Payment: Expect a minimum of 15% down on a single-family rental and 25% on a 2-4 unit rental, though putting more down often earns a better rate. If you will live in the property (house hacking), owner-occupied financing can require as little as 3% down on a Conventional Loan (5% on a 2-4 unit) or 3.5% with an FHA Loan.
- Cash Reserves: Lenders often require 6 months of liquid cash reserves to cover mortgage payments during vacancies.
- Property Condition: The property must be habitable and meet appraisal standards, unless utilizing a renovation loan product.
- Rental Income Analysis: For DSCR loans, the property’s projected rental income must generally meet or exceed the monthly mortgage payment (ratio of 1.0 or higher).
Benefits & Things to Consider with Rental Property Loans
For buyers with steady credit and a property that pencils out, a rental property loan offers a rare mix of flexibility and long-term upside. Here is what to weigh before you write the offer.
- Room to Grow: Conventional financing allows up to 10 financed properties, including the home you live in, which is more room than most individual landlords ever need. DSCR loans are underwritten on the property itself, one property at a time.
- No Personal Income Verification (DSCR): For experienced landlords, skipping the hassle of submitting tax returns and W2s speeds up the process and keeps your personal DTI (Debt-to-Income) ratio unaffected.
- Leverage House Hacking: Buy a home as your primary residence, live in it, and rent out the rest. That can mean one unit of a duplex or fourplex, or simply the spare bedrooms in a single-family home. Either way you use low down payment primary residence financing (FHA or Conventional) and let rent cover part of your mortgage.
- LLC Closing Options: Many of our rental property loan products allow you to close in the name of an LLC, offering you additional liability protection and asset separation.
Rental Property Loan Comparisons
The right program comes down to how you document your income and whether you plan to live in the property, so here is how the three most common paths to a 1-4 unit rental stack up side by side.
| Feature | DSCR Loan | Conventional (Rental) | House Hacking (FHA/Conv) |
|---|---|---|---|
| Qualification Basis | Property Rental Income | Personal Income (DTI) | Personal Income (DTI) |
| Down Payment | Typically 20% | 15% (1 unit) / 25% (2-4 units) | 3% - 5% |
| Documentation | Minimal (No Tax Returns) | Full (Tax Returns/W2s) | Full (Tax Returns/W2s) |
| Property Limits | Underwritten per property | 10 financed properties | Primary residence, 1-4 units |
| Best For | Self-Employed / Adding a Rental | Best Rates / First Rental | First-Time Buyers Who Want Rental Income |
How to Get Started with Rental Property Investing in Michigan
Financing a rental property takes a strategic partner, not just a lender, so our local team runs the numbers with you and guides you from pre-approval to closing on your 1-4 unit rental.
WHO THESE LOANS ARE FOR
“Investor” is a broad word, so here is exactly who these loans fit.
- Individual buyers purchasing a single-family rental, duplex, triplex, or fourplex.
- First-time rental property buyers purchasing rental number one, usually while keeping a day job.
- House hackers buying a home to live in, then renting out the other units or the spare bedrooms.
- Self-employed buyers whose tax returns understate what they actually earn.
- Small landlords adding the next rental in their own name or their own single-member LLC.
- Short-term rental owners buying an Airbnb or VRBO property in a Michigan market.
Key Loan Options for Michigan Rental Property Buyers
- Conventional Loan: Flexible down payments, starting at 15% on a single-family rental and as little as 3% down if you plan to live in the property. Often the best rates for borrowers with documented W2 income.
- DSCR Loan: Qualify based on the property’s rental income rather than your personal tax returns or employment history.
- Bank Statement Loan: Qualify using 12 to 24 months of bank deposits instead of tax returns, built for self-employed buyers.
- Asset Depletion: Use liquid assets like savings, brokerage, and retirement accounts as qualifying income.
- Flexible Property Types: Financing available for single-family homes, multi-unit properties (2-4 units), condos, and short-term rentals (like Airbnbs).
- House Hacking Friendly: Use FHA or Conventional financing to buy a 1-4 unit home you will live in, then rent the other units or spare rooms to offset your housing costs.
- Local Market Expertise: We know the Michigan rental market inside and out, ensuring your financing aligns with local opportunities.
- Competitive Terms: We offer both fixed-rate and interest-only options to help maximize your monthly cash flow.
DSCR Loans in Michigan: How They Work
New to DSCR financing? Watch this explainer to see how a lender qualifies a rental property on its own income, what coverage ratio you need to hit, and when a DSCR loan makes more sense than a Conventional loan on your next 1-4 unit purchase.
Loan-Specific Numbers & Details
Credit, down payment, and loan-to-value limits all shift depending on the program and whether you will live in the property, so here is where each one lands on a 1-4 unit rental.
| Loan Type | Min Credit Score | Min Down Payment | Max LTV |
|---|---|---|---|
| Conventional (Investment) | 620+ | 15% (1 unit) / 25% (2-4 units) | 85% |
| Conventional (Owner-Occupied) | 620+ | 3% (1 unit) / 5% (2-4 units) | 97% |
| DSCR (No Income Doc) | 640+ | 20% | 80% |
| FHA (Owner Occupied) | 580+ | 3.5% | 96.5% |
| VA (Owner Occupied) | 580+ | 0% | 100% |
Note: These figures are based on program guidelines and are subject to change. A conversation with a Loan Officer will provide the most accurate and up-to-date information for your scenario.
What are rental property mortgage rates today?
Interest rates on a rental property are often 0.5% to 0.875% higher than rates on the home you live in, due to increased risk. Rates fluctuate daily based on market trends. For the most current and accurate rates for your specific deal, speak directly with one of our Loan Officers.
Below are the average rates for mortgages nationally for residential loans:
Rates shown are for illustrative purposes only, are subject to change, and are not a commitment to lend. Treadstone Funding does not provide tax, financial, or legal advice. Please consult a licensed CPA, financial advisor, or attorney for guidance specific to your situation.
Technical Loan Information
- Loan Limits: Conventional limits follow county guidelines. The 2026 baseline applies in every Michigan county: $832,750 for a single-unit, $1,066,250 for a duplex, $1,288,800 for a triplex, and $1,601,750 for a fourplex. DSCR loan amounts vary by program.
- Occupancy: Rental properties (non-owner occupied) or owner-occupied multi-family (2-4 units).
- Eligible Properties: Single-family, 2-4 unit multi-family, townhomes, warrantable and non-warrantable condos, and short-term rentals.
- Prepayment Penalties: Standard Conventional loans have no prepayment penalties. Some DSCR products may have soft prepayment structures (check with your LO).
Why Neighborhood Loans?
Aside from having the coolest mortgage staff on the planet, working with Neighborhood Loans: Treadstone Division gives you a distinct advantage in Michigan’s competitive rental property market. Our Treadstone team has deep roots in Grand Rapids and across West and Mid Michigan, backed by the lending capacity and loan programs of Neighborhood Loans. We don’t just get your loan to the finish line; we help you become a more successful and informed rental property owner.
Investor-Friendly Real Estate Agents in West and Mid Michigan
Financing is only half of a good deal. The other half is a real estate agent who can run rent comps, spot deferred maintenance from the driveway, and knows which Grand Rapids and Lansing neighborhoods actually cash flow. The investor-friendly real estate agents below work with buyers purchasing 1-4 unit rental properties across West and Mid Michigan every week, and we are glad to make an introduction. Get pre-approved first: a seller will take a buyer with financing lined up over a stronger offer with question marks, and your agent can then filter listings to the ones that pencil at your real budget.
Rental Property Loan FAQs
DSCR stands for Debt Service Coverage Ratio. It is a loan that qualifies you based on the cash flow of the property (rent vs. mortgage payment) rather than your personal income or tax returns. It is ideal for self-employed landlords or those who already own several rentals.
Yes. For Conventional loans, we can often use 75% of the projected rental income (from a lease or appraisal) to offset the mortgage payment in your debt-to-income ratio. For DSCR loans, rental income is the primary qualifying factor.
For an investment property (where you won’t live there), Conventional financing allows as little as 15% down on a single-family rental and requires 25% on a 2-4 unit, though many landlords put 20-25% down to secure a better rate. If you plan to “house hack” and live in the property, whether that is one unit of a 2-4 unit or a single-family home where you rent out spare rooms, you may qualify for down payments as low as 3% (Conventional) or 3.5% (FHA).
Yes, but typically only with non-conforming loans like DSCR products. Conventional loans (Fannie Mae/Freddie Mac) generally require you to close in your personal name, though you may be able to deed it to an LLC after closing (consult an attorney).
Yes! We have loan products specifically designed to count short-term rental income (like Airbnb or VRBO) when qualifying for the loan.
It requires different criteria. Conventional loans on a rental property have stricter credit and reserve requirements than a loan on the home you live in. However, DSCR loans can be easier because they don’t require personal income verification.
House hacking means buying a home as your primary residence and renting out part of it. The classic version is a 2-4 unit property where you live in one unit and rent the others. It also works in a single-family home: live there and rent out the spare bedrooms. Because you occupy the property, you can use primary residence financing with lower rates and down payments as low as 3% (Conventional) or 3.5% (FHA). One thing to know: on a 2-4 unit, projected rent from the other units can often help you qualify. On a single-family home, rent from roommates usually cannot be counted toward qualifying unless you have a documented history of receiving it, but it still lowers what you actually pay each month.
Not necessarily. First-time landlords can often use projected rental income to qualify for Conventional loans, provided they meet credit and asset requirements. DSCR loans are also available to first-time landlords, though terms may vary slightly compared to seasoned pros.
