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Without understanding the current state of rental property mortgage rates, getting the most out of your investment efforts can become difficult. Until 2021, average 30-year mortgage offerings topped out at around 3%. Unfortunately, inflation, and several other important economic issues, have raised rates closer to 5%. In 2023, that rate hike is showing no signs of going down, so being prepared to look for a loan that will consider all the various aspects that can affect your mortgage rate is key. Doing so will ensure you get the most out of the rental properties for which you’re gaining a mortgage.

Separating Interest Rates from Percentage Rates

Especially for beginners, understanding the real difference between interest rates and annual percentage rates can be difficult. Simply put, interest rates are defined as the percentage of a loan a loan’s lender charges borrowers for accessing mortgage money. In contrast, APR (annual percentage rates) deal with the cost of borrowing your loan based on a yearly percentage payout. Depending on your current financial situation and your flexibility as a borrower, you can determine whether interest rates or APR-based deals will serve you best as you begin (or continue) your real estate adventure.

Mortgage Rates and APR

Speaking of APR, many seasoned investors will tell you that mortgage rates are directly tied up to a property’s APR. Understanding the exact nature of the APR you’re signing up for can help you determine how good of a deal you’re being offered. If you unwittingly accept a poorly crafted or predatory APR rate, dealing with the financial aftermath of this ill-fated decision can become absolutely overwhelming. By taking a thorough look at current rates for real estate investors, you can invest your money intelligently.

What Impacts Your Mortgage Rates?

When you’re ready to take the plunge, and finally invest in a real estate property, you’ll want to unlock the best possible mortgage and interest rates available to you. However, there are a plethora of factors that will impact the nature of your rates:

Down Payments

If you’re looking to secure a deliciously low mortgage and interest rate, you need to find as much money as you can for the initial down payment on a property. The more money you provide upfront, the better deals the property’s owner can offer you. This logic extends to banks that are setting up loan terms for potential real estate property investors as well, however, so be sure to stay aware.

Credit Scores

Lenders will look at a potential borrower’s credit score to ensure they can receive their monthly payments consistently. If your credit score is higher, you will have access to loans with much lower interest rates. For those with poor credit scores, you may be forced to start off with a subprime loan, or one that will be more difficult to profit immediately. For this reason, using a financial advisor to find an ideal loan and mortgage percentage rate is key for first-time real estate investors.

Loan-to-Value Ratio

Simply put, loan-to-value ratios deal with the amount of a loan, divided by the property’s current value (and the time of purchase). If you’re able to get a lower loan-to-value ratio setup, you’ll unlock significantly lower interest rates as well. As we mentioned earlier, by putting a larger down payment on the property you’re investing in, you can do wonders for lowering the loan-to-value ratio on a property.

Economic Conditions

Looking at the current state of the economy is key before making any huge investment (and rental property mortgages and the interest rates associated with them are no different). The more demand there is for homes in your area, the greater the demand for high-quality mortgage setups will become. Additionally, if you’re dealing with a seller’s market, you’ll need to expect higher-than-average interest rates.

Job Growth

Job growth rates can have a massive impact on mortgage and interest rates. Because more people can invest in properties during periods of massive job growth, the interest rates associated with these purchases will likely grow. Although fewer people will have the ability to purchase an investment property during periods of slow job growth, they will likely gain better interest rates during these financially uncertain times.


As anyone living in 2023 already understands, inflation impacts every single aspect of your financial well-being. Unfortunately, during periods of high inflation, the interest rates attached to investment property mortgages tend to rise significantly. Since Fed rates and other issues are already seeing added costs and interest rates for property investors, inflation creates a one-two punch that damages people’s ability to invest intelligently and beneficially in 2023.