Beyond private financing, consider government loans, traditional lenders, and personal equity.

The overview below outlines popular loan options for investors, including those suitable for less-than-perfect credit.

203K Loan: Backed by the Federal Housing Administration, 203K loans are available to eligible buyers looking to purchase and rehabilitate older or damaged properties. Only owner-occupants may apply for this loan, and the property must require repairs that meet FHA standards.

Home Equity Loan: Homeowners with enough equity may qualify for a home equity loan or line of credit. Eligibility typically requires a solid credit profile and adequate collateral.

FHA Loan: Designed for those with imperfect credit or limited funds for a down payment, FHA loans are available only to buyers intending to occupy the property as their primary residence. Borrowers must meet FHA eligibility standards, including income and credit qualifications.

Traditional Mortgage Loan: These loans are available to qualified borrowers. Lenders require proof of income, a satisfactory credit score, and a sufficient down payment. Properties must meet lender standards.

A conforming loan is a mortgage within the FHFA limit and meets the guidelines of Freddie Mac and Fannie Mae. (FHFA Conforming Loan Limit Values, 2026)

Portfolio Loan: Portfolio loans remain with the original lender, offering more flexible approval criteria. Eligibility is based on the lender’s internal guidelines, which may accommodate unique borrower situations. (How to Qualify for a Portfolio Loan: What Lenders Require, 2026)

VA Loan: VA loans are available to U.S. veterans, service members, and spouses. Issued by qualified lenders and guaranteed by the Department of Veterans Affairs, these loans guarantee up to 25 percent of the loan amount, with a maximum of $453,100. (VA Home Loan Entitlement and Limits, 2025) Borrowers may finance either the property’s reasonable value or the purchase price, whichever is less, plus the funding fee.

Lender financing is a strong option for new investors, but patience and preparation are essential. Be sure to understand the approval process and requirements.

203K Loan: 203K loans, backed by the Federal Housing Administration, help eligible buyers purchase and rehabilitate older or damaged primary residences. These loans include the purchase price, estimated renovation costs, a 3.5 percent down payment, and funding for repairs, plus up to six months of mortgage payments. (FHA 203(k) Loan: Renovation Mortgage Guidelines, 2026)

This policy allows homeowners to pay the mortgage during rehabilitation if the property is uninhabitable. Eligible borrowers must use licensed contractors and consultants; do-it-yourself work is not permitted. Only owner-occupied properties with one to four units qualify; fix-and-flip properties do not.

Home Equity Loan

If investors have equity in their residence, they can obtain a loan against it. Home equity loans or Home Equity Lines of Credit (HELOC) use the property as collateral and can fund home repairs, education, or debt consolidation.

Home equity loans typically offer low interest rates tied to the prime rate. (Bank Prime Loan Rate | ALFRED | St. Louis Fed, 2026) Borrowers must have sufficient equity and meet credit standards. Flexible fund use and repayment options make these loans valuable for portfolio growth. (Dornan, 2026)

FHA Loan

The FHA loan is backed by the Federal Housing Administration. Eligibility requires meeting credit and income standards that are more flexible than those for conventional loans. FHA loans assist those with less-than-perfect credit or limited savings, requiring only a 3.5 percent down payment and offering competitive rates. owner-occupied homes, but they also permit purchases of multi-unit properties for owner-occupancy. Borrowers putting down less than 20 percent must pay private mortgage insurance. Loan limits for single-unit owner-occupied properties range from $294,515 to $679,650, depending on the market. (FHA Single-Family Insurable Limit Values, n.d.)

Private Money Lenders  or Hard Money Loans in Arizona

Investors who are well-connected can often tap into capital from personal connections, borrowing money at a specified interest rate and payback period. Private money lenders play a key role in supporting new investors. They provide capital and are often keen to establish mutually beneficial partnerships. Private money lenders provide funds at agreed interest rates and repayment terms, typically for terms of 6 months to 1 year. These loans are common for short-term projects. Use private money only with a clear exit strategy.

Seller Financing

Seller financing allows buyers to make payments directly to the seller, skipping traditional lenders. This can expedite sales for motivated sellers and help investors avoid standard mortgage requirements.

This arrangement often results in faster transactions and lower closing costs. Additionally, the seller can sell the promissory note if they prefer not to manage the financing.

Traditional Mortgage Loan

Traditional lenders, such as banks, offer both conventional and FHA loans. These options remain popular due to historically low interest rates.

Traditional lenders have strict guidelines. They require a 15 to 25 percent down payment, a minimum 680 credit score, and thorough income documentation. Investors must verify the source of funds and show they have held them for at least 60 days. Gifted funds are not allowed, which may limit some investors. (What Is Mortgage Seasoning And Its Requirements?, 2024) Fannie Mae and Freddie Mac set standardized rules for these loans. A “conforming” loan is one whose loan amount is below the limit set by the Federal Housing Finance Agency. In 2019, this limit is $484,350, though it is higher in certain markets such as New York or San Diego. (Agency, 2018)

Outside of the size of the loan itself, conforming loans are also characterized by the following:

• Loan-To-Value Ratio
• Debt-To-Income Ratio
• Credit Score & History
• Documentation criteria

Portfolio Loans

Portfolio loans remain with the original lender and are not sold on the secondary market. Borrowers can maintain a direct relationship with their lender and communicate openly. (Dornan, 2026)

Summary

Careful financial planning is essential in real estate investing. Investors should select the financing method that best fits each deal. Understanding various financing strategies builds confidence to start and grow.

Which real estate financing option do you find most compelling? Please share your thoughts in the comments.

Matt Prosory RI/MLO/Broker
NCO Enterprises LLC
Private Hard Money
DBA Setabay/SetabayLoan/Level 4 Funding
26731 N 90th Drive
Peoria AZ 85383
Matt@Level4Funding.com
Telephone: 623-582-4444
NMLS 2062278 NMLS 1118493

Equal Housing Opportunity. This is not a Good Faith Estimate, and it is not a Guarantee to lend; it should not be considered as such. Costs, rates, estimates, and terms can only be determined after a full application is completed. To the extent this message includes any tax or legal advice, this message is not intended or written by the sender to be used, and cannot be used, for legal or tax purposes or advice. This is an advertisement. Copyright © 2026.  All rights reserved.

References

(2026). FHFA Conforming Loan Limit Values. Federal Housing Finance Agency. https://www.fhfa.gov/data/conforming-loan-limit

(2026). How to Qualify for a Portfolio Loan: What Lenders Require. Paragraphs 1-8. https://legalclarity.org/how-to-qualify-for-a-portfolio-loan-what-lenders-require/

(2026). Bank Prime Loan Rate | ALFRED | St. Louis Fed. Section ‘Bank Prime Loan Rate’ showing updated prime rate as of July 2026. https://alfred.stlouisfed.org/series?seid=MPRIME

Dornan, B. (2026). Portfolio Loans 2026 | RefiGuide. https://www.refiguide.org/portfolio-loan-guide/

Dornan, B. (2026). Portfolio Loans 2026 | RefiGuide. Portfolio Loan Guide section. https://www.refiguide.org/portfolio-loan-guide/