9 Ways to Fund Your Next Deal

Financing quietly decides whether a deal works. The same property can be a winner or a money pit depending on how you pay for it. Here are nine ways investors fund deals, from the plain mortgage your parents used to the creative structures seasoned buyers lean on. Each one exists for a reason, fits a certain buyer, and carries its own risk. Swipe the cards, then read the breakdown below.

1. Conventional 30 Year Fixed

Beginner, Common. A fixed rate mortgage, usually 5% to 20% down, paid back over 30 years at a payment that never changes.

• Why it exists: the baseline loan the whole housing market is built on. Predictable payments are easy to budget and easy for lenders to sell.

• Who goes for it: first time buyers and buy and hold investors who want a set it and forget it payment and can qualify on credit and income.

• Example: buy a rental for 300k, put 20% down, lock the payment for 30 years. Rent covers the note and your cost never moves even if rates climb.

• Watch out: needs strong credit and verifiable income, and a big down payment ties up cash you could deploy elsewhere.

2. FHA and Low Down

Beginner, Common. A government backed loan that lets buyers in with as little as 3.5% down.

• Why it exists: to help people buy when they do not have a big pile of cash. The government insures the loan so lenders take less risk.

• Who goes for it: first time buyers and house hackers who are short on cash but can occupy the property.

• Example: buy a duplex for 250k with 3.5% down, live in one side, rent the other. You are in for under 10k out of pocket.

• Watch out: mandatory mortgage insurance for the life of most loans, plus an owner occupancy rule that keeps it tied to where you live.

3. House Hacking

Beginner, Common. Buy a 2 to 4 unit, live in one part, rent the rest, and let tenants cover the mortgage.

• Why it exists: it turns your housing cost, usually your biggest expense, into income. It is the cheapest way into investing.

• Who goes for it: new investors turning a first owner occupied purchase into cash flow.

• Example: buy a triplex, live in one unit, the other two rent for more than your full mortgage. You live for free and pocket the spread.

• Watch out: you live next to your tenants, so a vacancy or a bad renter hits your personal budget directly.

4. HELOC

Standard, Common. A home equity line of credit. A revolving credit line drawn against the equity in a property you already own.

• Why it exists: it lets you tap equity without selling or fully refinancing. Borrow what you need, pay it back, borrow again, like a credit card secured by your house.

• Who goes for it: owners with equity who want flexible cash for down payments, rehab, or a short term bridge.

• Example: you have 150k of equity. Open a HELOC, pull 40k for a down payment on a rental, pay it back from cash flow over the next year.

• Watch out: the rate is usually variable and can spike your payment, and your home is the collateral if things go sideways.

5. Cash Out Refinance

Standard, Common. Refinance into a larger loan and pocket the difference between the new balance and what you owed.

• Why it exists: it pulls trapped equity out of a property so you can put it to work, at a fixed rate unlike a HELOC.

• Who goes for it: investors sitting on an appreciated property who want a lump sum for the next acquisition.

• Example: your rental is worth 400k and you owe 200k. Refinance into a 300k loan and walk away with 100k to buy the next one.

• Watch out: you reset your rate and term, possibly worse than today, and a bigger balance means a bigger payment.

6. DSCR Loan

Standard, Investor Pick. Debt service coverage ratio loan. The property qualifies on its own rental income, not your personal income.

• Why it exists: plenty of good investors look broke on paper because of write offs or self employment. DSCR lets the deal stand on its own numbers.

• Who goes for it: investors scaling a rental portfolio when traditional income qualifying is a headache.

• Example: you have eight mortgages and a tax return full of deductions. A bank says no. A DSCR lender sees the rental brings in 2,500 a month against a 1,900 payment and approves on that ratio alone.

• Watch out: higher rates and fees, and the loan leans entirely on the rent holding up.

7. The BRRRR Method

Experienced, Common. Buy, rehab, rent, refinance, repeat. Buy cheap, renovate to force appreciation, rent it, then refinance to recycle your capital.

• Why it exists: it lets you build a portfolio using the same chunk of money over and over instead of needing fresh cash for every deal.

• Who goes for it: active investors who can manage renovations and want to scale fast.

• Example: buy a house that needs work for 120k, put 40k into it, it appraises at 220k. Refinance, pull most of your 160k back out, roll it into the next one.

• Watch out: a blown rehab budget or a low appraisal can strand your cash inside the property.

8. Hard Money and Bridge

Experienced, Uncommon. Short term, asset based loans from private lenders. Priced high and built for speed.

• Why it exists: banks are slow. When a deal has to close in days, hard money fills the gap until permanent financing catches up.

• Who goes for it: flippers and investors closing fast on a distressed deal before conventional financing can move.

• Example: an off market flip has to close in seven days. You use hard money at 11% plus points to grab it, rehab, then refinance or sell within six months.

• Watch out: steep interest and points. Without a clean, fast exit you bleed cash quickly.

9. Seller Financing

Experienced, Uncommon. Creative deals where the seller acts as the bank, or you take over their existing payments (subject to).

• Why it exists: it opens doors when bank financing does not fit, when a seller wants steady income, or when an existing low rate is worth keeping.

• Who goes for it: experienced buyers structuring a purchase with no bank when the seller is flexible.

• Example: a retiring landlord owns a property free and clear. Instead of a bank, you pay him directly over ten years at an agreed rate. He gets monthly income, you skip the lender.

• Watch out: legally nuanced. Subject to deals can trigger a due on sale clause and are easy to structure badly without good counsel.

The Bottom Line

No single loan wins. The right one depends on the deal, your cash, your credit, and how fast you need to move. The investors who scale are the ones who know all nine and reach for the right tool on each deal.