Real Estate Investing 2025: Best Ways to Finance a Property — and How Rental Income Can Pay the Mortgage
Real estate remains one of the most reliable and profitable investment strategies in the world. In 2025, despite higher interest rates and rising property prices, real estate still offers stability, long-term appreciation and one major advantage that few other investments provide: your tenant can pay the mortgage for you.
This article explains the best ways to finance an investment property, how rental income can cover or exceed your monthly payments, and how investors use leverage to build long-term wealth.
- Why Real Estate Remains a Top Investment in 2025
Even in a high-rate environment, property remains one of the most resilient asset classes.
Benefits of real estate investing:
- Monthly passive income from rental payments
- Long-term appreciation in most U.S. markets
- Hedge against inflation
- Tax deductions for interest, depreciation, repairs
- Leveraged growth using the bank’s money
- Ways to Finance an Investment Property
There are multiple financing options depending on your credit score, income, property type and investment strategy.
1 — Conventional Mortgage (Investment Property Loan)
Most common method.
- Down payment: 15%–25%
- Higher credit score required (680+)
- Higher interest rates for investment loans
Best for long-term rentals and duplexes.
2 — FHA Loans (for House Hackers)
FHA loans cannot be used for investment properties directly, but you CAN use them to buy a 2–4 unit building if you live in one unit and rent the others.
Down payment can be as low as 3.5%.
3 — VA Loans (for Veterans)
For eligible veterans:
- 0% down
- No mortgage insurance
- Can buy up to 4 units if you live in one
Rent from other units can pay most of the mortgage.
4 — DSCR Loans (Debt Service Coverage Ratio)
Very popular for investors.
You qualify based on rental income, not personal income.
If (Rent / Mortgage) ≥ 1.0
The loan is usually approved.
Perfect for investors with multiple properties.
5 — Hard Money Loans
Short-term, expensive loans for:
- Fix-and-flip
- BRRRR strategy
Very fast approval.
6 — Home Equity Loans / HELOC
Use equity from your primary home to buy an investment property.
Benefits:
- Lower interest
- Flexibility
- Easy access to capital
- How Rental Income Pays Your Mortgage
Example:
- Mortgage payment: $1,800
- Rent: $2,400
The tenant covers:
- Mortgage
- Taxes
- Insurance
You keep the remaining $600 as cash flow while building equity.
- The BRRRR Method
BRRRR = Buy, Renovate, Rent, Refinance, Repeat
- Buy undervalued
- Renovate
- Rent
- Refinance at higher value
- Pull cash out
- Buy the next property
Allows fast portfolio growth.
- Short-Term Rentals (Airbnb, Vrbo)
Pros:
- Very high cash flow
- Flexible personal use
- Good for tourist areas
Cons:
- More management
- Regulations vary
- Seasonal fluctuations
- REITs (Real Estate Investment Trusts)
If you don’t want to buy physical property, REITs offer:
- High liquidity
- Low entry cost
- Strong dividends
Great for passive investors.
- Real Estate Crowdfunding
Platforms like Fundrise allow small investments in large commercial deals.
Advantages:
- Passive
- Diversified
- Good long-term returns
- How to Make a Property Pay for Itself
- Choose strong rental markets
- Run cash flow analysis before buying
- Avoid negative cash flow properties
- Negotiate interest rates
- Use property management if needed
Cash flow formula:
Rent – (Mortgage + Taxes + Insurance + Repairs + Vacancy) = Profit
- Risks to Consider
- Property vacancies
- Repair costs
- Rising interest rates
- Bad tenants
- Market downturns
Mitigate with reserves, insurance, and good tenant screening.
- Final Thoughts
Real estate is one of the best long-term wealth-building tools available. With smart financing, rental income can pay your mortgage, generate cash flow, and build equity over time.
Whether you use traditional loans, FHA house hacking, DSCR loans, or the BRRRR method, real estate offers unmatched leverage and stability.
If you buy the right property in the right market, your investment can literally pay for itself.
