Investors refinance for a handful of reasons. A hard money loan is about to mature. A rate that made sense three years ago no longer does. A renovation is finished and the property is leased up at a higher rent. In each case the old loan was written for a different version of the property, and a new loan should reflect what it is today.
A DSCR refinance reads the current lease and the current payment. If the property carries itself, you are approved on the property. There is no need to show how much you earned last year somewhere else.
Who this loan fits
- Investors finishing a rehab with a bridge or hard money loan due soon
- Owners whose rent has grown since the original loan was written
- Borrowers who want to lock a fixed rate for a long stretch
- Anyone moving a property from a personal name into an LLC
When a refinance makes sense
The clearest case is a maturing short-term loan. If your bridge note comes due in 60 days and the property now rents well, a DSCR refinance gives you somewhere to land. Start the conversation early. Appraisals, title work, and entity paperwork take time, and a late payoff is expensive.
A second case is rate. If pricing has improved since you closed, even a modest drop can add real cash flow to a property over a long hold. Run the numbers with the calculator on this site and compare the new payment against the old one.
Seasoning and timing
Some programs ask you to have owned the property for a set number of months before they will use the new appraised value instead of your purchase price. Rules differ between lenders and change over time. Ask us about your situation before you assume a timeline.
What a refinance costs
Expect an appraisal, title and settlement fees, a lender fee, and the cost of any prepayment penalty on the loan you are paying off. We show you an estimate before you commit so there are no surprises on closing day.
A sample refinance
- Appraised value after rehab
- $520,000
- New loan (70% LTV)
- $364,000
- Payoff of bridge loan
- $318,000
- Monthly rent
- $3,900
- Principal, interest, taxes, insurance
- $3,120
- DSCR
- 1.25
Illustration only. Closing costs, reserves, and final loan size depend on underwriting and current pricing.