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Buying a rental property with little or no money down

By Cedrick Reese, Property Rental Calculator · Updated August 2026

A large down payment isn't the only way in. Here are the real strategies investors use to buy with limited cash, and what each one actually costs you in exchange.

House hacking: the lowest-risk way to start

Buy a small multifamily property, live in one unit, and rent the others. Because it's your primary residence, you qualify for owner-occupied financing, often 5% down or less, instead of the 15 to 25% a straight investment loan requires. The house hack calculator shows your real net housing cost once the other units' rent is factored in; many house hackers end up living for free or close to it. The tradeoff is you have to actually live there, so it only works if that fits your life right now. See our step-by-step roadmap for how this fits into the bigger picture.

Seller financing

Some sellers, especially ones who own a property free and clear, will act as the lender themselves. You make payments directly to them instead of a bank, on terms you negotiate together: down payment, interest rate, amortization, and length. This can mean a low or even no down payment if the seller is motivated and flexible. It only works when you find a seller open to it, and you should have the terms reviewed by a real estate attorney, since you're writing the loan contract from scratch rather than using a standardized bank product.

Hard money and private money loans

Hard money lenders care much more about the property's value than your credit score or income. That makes them useful for buy-and-rehab strategies like BRRRR, where a lender might cover a large share of the purchase and rehab cost against the property as collateral. The cost is real: short terms and higher interest rates than a conventional loan. Hard money is a bridge, not a permanent mortgage, meant to be refinanced into cheaper long-term debt once the property is stabilized. Run the numbers both ways in the BRRRR calculator before committing, since the exit refinance is what makes or breaks this strategy.

Partnerships

If you don't have the capital but you have the time and the deal-finding skill, a partner with cash can fund the purchase while you handle the work: finding the deal, managing the rehab, or running the property day to day. Put the split, roles, and exit terms in writing before you close, not after. A handshake agreement on a real estate deal is a common source of expensive disputes later.

Government-backed low-down-payment loans

FHA and VA loans allow very low down payments, but they're built for owner-occupied primary residences, not straight investment purchases. The house-hacking strategy above is the legitimate way to combine a low-down-payment loan with a genuine rental income stream: you occupy the property to qualify, then rent out the rest.

The real tradeoff

Every one of these strategies trades a lower cash requirement for either higher cost (hard money's rate), more risk (a partner's money on the line, a seller's trust), or a real lifestyle commitment (living in the property). None of them are free money. Before committing to any of them, run the deal through the max offer calculator to confirm the price still works once you account for the higher financing cost, and check DSCR financing as a comparison point in DSCR loans explained, since a DSCR loan with a standard down payment is sometimes simpler and cheaper than a creative-financing structure once you add up the real cost of the alternative.