DSCR rate-and-term refinance
A DSCR rate-and-term refinance replaces the existing loan on a rental to change its term, structure or pricing, without taking meaningful cash out. If the new payment is lower, the property's ratio improves, and the lender qualifies it on the rent compared with that new payment.
Who is this loan a good fit for?
- Owners moving a renovated rental off a short-term or hard money loan into long-term financing
- Investors who want a different amortization or to remove an interest-only feature
- Owners whose rents have risen and who want terms that reflect the stronger ratio
- Owners consolidating title into an LLC, where the lender allows it
Where the ratio can improve
A lower payment, a longer amortization or moving off a short-term loan all change the bottom of the fraction. Higher rent since you bought changes the top. Both can make a refinance worth checking even if you are not taking cash out.
Business-purpose loans for non-owner-occupied investment property only. Debt Service Coverage Ratio is a mortgage broker: we arrange and shop financing from wholesale lenders, and every loan is subject to the lender's underwriting and approval.
How does this loan work?
Compare old and new payments
Calculate the new PITIA under the proposed loan and divide the current rent by it. Compare that ratio with what you have today.
Weigh the costs
Refinancing has closing costs and may involve prepayment terms on your current loan. Make sure the change is worth what it costs.
We shop it
We take the scenario to wholesale lenders and lay out the payment, structure and total cost of each option side by side.
Appraisal, underwriting, close
A new appraisal confirms value and market rent, the lender underwrites, and the old loan is paid off at closing.
What should you expect during underwriting?
- A current lease and possibly rent receipts if the property is occupied
- A payoff statement and any prepayment terms from your current lender
- A new appraisal with a rent schedule
- Reserves, credit review and business-purpose certification
What should you check before applying?
- A prepayment charge on your current loan can outweigh the savings; read your note.
- Extending the term lowers the payment but can raise total interest over the life of the loan.
- The property must remain non-owner-occupied investment property.
What should you know about dscr rate-and-term refinance?
Can I refinance off a hard money loan with a DSCR loan?
Often, yes, once the property is rentable and any seasoning requirement is met. The DSCR loan then qualifies on market rent or the new lease.
Will refinancing improve my DSCR?
If the new payment is lower than the current one, the ratio rises. If the rent has increased since you bought, that helps too.
Do I need a tenant to refinance with a DSCR loan?
Not always. Some programs use the appraiser's market rent for a vacant property, while others prefer a lease on a refinance. We check how each lender treats vacancy.
Which guides should you read next?
Which other DSCR loan options are available?
DSCR purchase loans
Buy a rental with financing sized to what the property rents for, using appraisal market rent in the ratio.
DSCR cash-out refinance
Pull equity out of a rental you own, with the larger new loan still qualifying on the property's rent.
Short-term rental DSCR loans
Finance a vacation or short-term rental where the ratio may use booking history, a market projection or long-term rent.
2-4 unit DSCR loans
Finance a duplex, triplex or fourplex where the rent from every unit is combined on top of the ratio.
Investment property loans
An overview of business-purpose financing for non-owner-occupied rentals, and where a DSCR loan fits among the options.
Ready to discuss your rental property ratio?
Send the rent, the property and what you want to do. We take the scenario to multiple wholesale lenders, show how each one reads your DSCR, and explain the tradeoffs before you commit to anything.