The prepayment penalty is where the money is
Start here, because it is the term most borrowers never compare and the one most likely to cost them real money.
Most DSCR loans carry a prepayment penalty, usually a step-down over three to five years. A 5-4-3-2-1 structure means five percent of the balance if you pay off in year one, four percent in year two, and so on. A 3-2-1 runs three years. Some programs offer no penalty at all.
Here is the trade nobody puts on the rate sheet: accepting a longer penalty typically buys you a lower rate. Which means the lender quoting you the sharpest rate is frequently the one attaching the harshest penalty. A lower advertised number and a worse loan are entirely compatible.
So the right structure depends on your hold, not on the headline:
Holding five years or more, the 5-4-3-2-1 usually wins: you take the rate saving and never pay the penalty. Selling or refinancing inside one to three years, pay the higher rate and take the no-penalty option, because a five percent penalty on a $300,000 loan is $15,000 and no rate saving covers that.
Ask two questions of any DSCR lender: what is the penalty structure, and is there a buyout. Get both in writing.
Five more things that vary more than you would expect
The minimum ratio, and what happens below it. Many programs enforce a 1.0 floor and decline anything under it outright. Others fund below 1.0 with larger reserves or a bigger down payment, and some run no-ratio programs entirely. If your rent is $2,000 against a $2,200 payment, one lender instantly declines you and another writes the loan. That single guideline is the difference between a deal and no deal, and it is not visible on any rate sheet.
The credit floor. Many published minimums sit around 620 or higher. Some programs, including our lending partners' DSCR program, have none at all. Worth knowing before you let anyone pull your file.
Seasoning on a cash-out refinance. If you bought with cash and want to pull money back out, some lenders require six months on title before they will lend. Others do not. For a BRRRR strategy that timing difference is the whole plan.
Whether market rent counts. With no tenant in place, some lenders will qualify the property on market rent from the appraiser's rent schedule rather than requiring a signed lease. Others will not touch it until it is leased. On a freshly renovated property, that determines whether you can close now or in sixty days.
What they will not lend on at all. Most DSCR programs exclude five-plus unit apartments, which are commercial, and many exclude manufactured homes, co-ops, non-warrantable condos, and properties in rural ZIP codes with too few rental comps to support an appraisal. Confirm the property type before you spend money on diligence.
One thing about DSCR loans that deserves stating plainly
DSCR loans are business-purpose loans, not qualified mortgages. That is what makes them fast and flexible: no tax returns, no W-2s, no employment verification, no debt-to-income calculation.
It also means the federal TRID disclosure rules that govern a consumer mortgage do not apply. There is no legal requirement to hand you a standardized disclosure at a set point in the process, and some lenders use that gap to leave terms vague until closing.
The protection is simple and entirely in your hands: require a written term sheet early, listing the rate, the points, the prepayment structure, the reserve requirement and the cash to close. If the numbers move between that sheet and the loan documents, the movement itself is the signal, not its size.
Have a deal on the table?
Send the address, the numbers and your exit. Our lending partner's team reviews it and tells you whether it fits and on what terms. The lender makes every credit decision.
Where the market sits in October 2026
Useful context for judging whatever quote you are holding.
Freddie Mac's conventional 30-year benchmark averaged 7.28 percent on October 1, 2026, up from 6.34 percent a year earlier. DSCR pricing usually sits above conventional investment pricing, though the gap varies a lot by lender. As one dated example, a DSCR lender's published October 2026 rate page shows 30-year pricing from 6.88 to 8.50 percent, depending on credit, ratio, down payment, buydown points and the prepayment term.
Twenty percent down is the common starting point on a purchase, with 25 percent often where pricing improves. Cash-out refinances cap lower, commonly 70 to 75 percent of value. Reserves are set lender by lender and cannot be drained at the closing table. How long closing takes depends on the appraisal, the title work and how quickly you supply documents; no lender's timeline is a promise.
On the ratio itself: 1.25 and above generally gets the best pricing and the most leverage. Between 1.10 and 1.25 still prices well at many lenders. Below 1.00 narrows the field to the programs that allow it.
Where our lending partners' program sits
A DSCR rental loan with no minimum credit score, from $75,000 to $2 million, at up to 80 percent of value. Non-owner-occupied, business purpose. The lender prices each file and makes every credit decision.
Two of those are worth drawing out, because they solve specific problems the guidelines above create.
No minimum credit score matters when the property is strong and your file is not. Many programs set a floor; this one starts from whether the rent covers the payment, and your score shows up in pricing and leverage instead.
The minimum loan size matters at the bottom of the price range. Inexpensive rentals in markets such as Cleveland or Detroit can fall under a $75,000 or $100,000 floor at some lenders, so confirm the minimum loan amount with the lender for your property before you make an offer.
For renovation and short-term loans, our lending partners' standard pricing starts at 12.99 percent interest plus 2.99 points. A 10.99 percent rate with 1.99 points is loyalty pricing, available only after two loans have been paid off in good standing with the lending partner.
Dominion Hard Money does not lend its own funds; it arranges financing through third-party lending partners. When a file has already been declined somewhere, that matters: the question is which program fits the deal, not how to defend one balance sheet.
Before you choose a lender
Run the numbers first so you are having a specific conversation rather than a general one. The loan calculator has a DSCR tab that gives you the ratio and the full payment including taxes and insurance.
Then ask every lender the same seven questions, which we set out on how to vet a lender. Ask us them too.
Keep reading
Pennsylvania · Maryland · DSCR loans · Loan calculator · How to vet a lender
Get your deal reviewed
Answer these and your deal goes to our lending partner's team, who will contact you about whether it is fundable and on what terms. By sending it you agree to your details being shared with them. Investment property only: our lending partners do not finance a home you will live in.
Got it.
Thank you. Your details are on their way to our lending partner's team, who will contact you shortly.
Questions investors ask
Does my DSCR lender need to be in my state?
What matters is whether the lender can lend where the property is, not where you live or where it is headquartered. Ask directly whether it is active in that state.
What if my DSCR ratio is below 1.0?
Some programs decline it outright and some fund it with larger reserves or a bigger down payment. It is a guideline question rather than a math question, which is exactly why it pays to look at more than one program.
Can I close a DSCR loan in my LLC?
Yes, these loans are commonly made to entities rather than individuals. The lender may still ask you to sign personally.
Which DSCR lender has no minimum credit score?
Some programs have no published floor. Our lending partners' DSCR program is one of them; your score still affects the rate and leverage the lender offers.
Is a DSCR loan the same as hard money?
No. Hard money is short-term money for buying and renovating, repaid by a sale or refinance. DSCR is long-term amortizing money for holding a rental. Many investors use the first to buy and the second to keep: see how DSCR loans work for the mechanics.
Sources
- Consumer Financial Protection Bureau, Regulation Z official interpretation of 1026.3(a), business-purpose rental credit sits outside consumer mortgage disclosure rules (accessed Oct 2026)
- Freddie Mac, "Mortgage Rates Average 7.28%," October 1, 2026, the conventional 30-year benchmark (accessed Oct 2026)
- InvestorPropertyLoan, DSCR loan rates (October 2026), DSCR pricing of 6.88% to 8.50%, tiers effective September 29, 2026 (accessed Oct 2026)
- Ridge Street Capital, DSCR loan rates, an example of a lender advertising pricing by property type (accessed Oct 2026)
Dominion Hard Money does not lend its own funds; it arranges financing through third-party lending partners. All financing is arranged for business purposes only and secured by non-owner-occupied investment property. Not a commitment to lend. All loans subject to underwriting, property review, and approval by the lender. Terms vary by property, borrower experience, and exit strategy.