Mortgage Rate
Intelligence

The 0.875% premium you're eating on this duplex is actually on the low end right now. Most lenders are tacking on a full point or more for investment properties because they know you'll walk the second the numbers don't work, unlike some starry-eyed homebuyer who's emotionally committed to a kitchen backsplash. That spread widens further when liquidity tightens or defaults tick up, which we're seeing in pockets of the market. At 8.025%, you're not getting robbed, but you're definitely paying the "this isn't where I get my mail" tax.

Your rate is going to move based on four things, in this order: loan-to-value, debt service coverage ratio, your credit score, and the fact that it's a 2-family in Waltham and not some aging triple-decker in a tertiary market. If you're coming in at 75% LTV or lower, you've got room to negotiate down. DSCR better be at least 1.25 or you'll see rate adjustments or get walked to a different product entirely. Credit score above 740 keeps you in the cleanest pricing tier. The 2-family designation helps—it's not a 4-unit or a mixed-use problem child that gives underwriters heartburn.

Going fixed at 8% makes sense here because ARMs on investment properties are currently priced like a hostage negotiation—the initial rate barely saves you anything, and the margins and caps are punitive. Unless you're absolutely certain you're refinancing or selling within three years, the fixed route gives you predictable cash flow and lets you underwrite the deal honestly. ARMs seduce investors into bad math.

Push back on origination fees and ask explicitly about rate buydown cost. If you've got excess liquidity, half a point upfront could drop you to 7.75%, and on a $400K loan that pencils out fast. Also confirm whether the lender will waive escrow impounds if you go below 80% LTV—it's not rate, but it's cash flow, and cash flow is the only thing that matters in this asset class.