Insights · Investor questions
Should you put more than 20% down on a rental?
By Danté M. Shackelford, Founder and Managing Principal of EMx Lending
Updated November 5, 2026
Short answer
You don't have to, but late in the cycle it can be the safer call. Putting 25% or 30% down instead of 20% gives you more exit options. If values dip, you're less likely to owe more than a new loan or a sale can cover.
The risk with maximum leverage
Most people assume values always rise. If you're at 80% loan-to-value and values fall, you can get stuck. Say you need to refinance or pull equity later: the new loan, sized on the lower value, may not be big enough to pay off the old one. Then you have to bring cash to close or wait.
At 75% or 70%, a price drop eats into your cushion instead of trapping you.
What you get for the extra cash
- More exit options: refinance, sell or hold, even if values soften.
- Better cash flow: a smaller loan means a smaller payment and a higher DSCR.
- Sometimes better terms: lower leverage can improve pricing.
When 20% down still makes sense
If a deal has a big margin, strong cash flow and you plan to hold a long time, maximum leverage can be the right move. That way you keep cash for the next one. It depends on your portfolio, your reserves and your market. That's the conversation we have with clients deal by deal.
See what you need to qualify for a DSCR loan for the leverage available at each credit tier.
This is general education, not investment, legal or tax advice. Loan terms are general guidelines, depend on credit, experience and the property, are subject to change and are not a commitment to lend. EMx Lending makes business-purpose loans on non-owner-occupied investment property in all states except Vermont, North Carolina, North Dakota, South Dakota, Idaho, California, Arizona and Nevada.
Not sure how much to put down?
Book a strategy session and we'll look at the deal against your whole portfolio.