Finished the build? Move into a long-term rental loan.
If you built or renovated a property with a construction loan or a hard-money loan, that loan is short-term and expensive to keep. A construction takeout (also called a “build-to-rent refinance”) pays it off with a long-term loan so you can hold the property as a rental.
With a DSCR loan, we qualify the loan mainly on the property’s rental income compared with its monthly costs. We don’t use your personal tax returns or W-2s to calculate it.
Who this is for
- Builders and developers who want to keep finished homes as rentals
- Investors finishing a ground-up build, a major renovation, or a DADU/ADU
- Borrowers whose hard-money or construction loan is coming due
How it works
- Tell us about the project. Property, structure type, current loan payoff, and what you paid or spent to build.
- We check the numbers. We look at the appraised value, the market rent, and the property’s costs to see whether it qualifies.
- We match you with a lender. We compare programs that take out construction loans.
- Close and pay off the construction loan. The new loan pays off your existing lender and sets your long-term terms.
Illustrative example (numbers are examples only)
Completed property appraises at $[850,000]. Market rent is $[4,200]/month. Monthly costs (principal, interest, taxes, insurance, HOA if any) are $[3,500]. DSCR = 4,200 ÷ 3,500 = 1.20. Actual qualifying ratios, rates, and loan amounts depend on the lender and the file.
Frequently asked questions
Can I refinance my construction or hard-money loan right after the project is complete?
Most programs let you refinance as soon as the property is complete and has a certificate of occupancy. Ask us about timing for your project before your construction loan matures.
Will you lend on the completed appraised value, or limit the loan to my build cost or ownership time?
This is the most important question, and it varies by lender. Some programs use the completed appraised value from day one. Others limit the loan to the lower of appraised value or your cost basis until a seasoning period (often [6–12] months) passes. We’ll tell you which applies to your deal before you commit to a timeline.
Can I close using market rent, or do I need an executed lease and collected rent?
Many DSCR programs qualify a new or vacant property using the appraiser’s market rent estimate, so you may not need a tenant in place. Some programs require a signed lease or proof of 2 months collected rent.
Is paying off my construction loan treated as rate-and-term or cash-out?
The classification affects how much you can borrow. Paying off a construction loan used to buy the land and build is often treated as rate-and-term, Cash-out usually means lower maximum leverage. We’ll confirm the classification before you decide.
Will you finance my exact structure: single-family, townhome, DADU, or detached condo?
Single-family homes and townhomes are widely eligible. Detached condos, DADUs/ADUs, and units on a shared lot depend on the lender and on how the property is legally divided. Condo projects with 10 or more units generally have additional requirements. Send us the condo map and we’ll tell you before you apply.
What are the prepayment penalties, and what happens if I sell in year one or two?
Most DSCR loans carry a prepayment penalty, either a flat 5%, 6 months interest or often a declining schedule, such as [5-4-3-2-1] percent or [3-2-1] percent over the first years. If you sell or refinance during that period, you pay the penalty. Some programs offer shorter terms, or no-penalty options with a higher rate. If you plan to sell in year one or two, tell us up front so we pick a loan that matches your exit.