Every DSCR lender advertises a rate. Almost none of them lead with the terms that decide what the loan actually costs you. Here is what genuinely differs between programmes, in the order it will matter to your deal.
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 programmes 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, commonly a quarter to a half point. 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.
The minimum ratio, and what happens below it. Many programmes 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 programmes 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. Published minimums cluster around 620 to 660 across the market. Some programmes 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 programmes 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.
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 standardised 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.
Useful context for judging whatever quote you are holding.
DSCR pricing generally runs one to two percentage points above conventional investment property rates, which is the cost of the reduced documentation. With conventional near 7 percent, one-year ARM DSCR products have been starting around 5.375 percent and thirty-year fixed, forty-year fixed and five-year ARM options around 6.375, depending on credit, ratio, down payment, buydown points and the prepayment term.
Twenty percent down is the standard on a purchase, with 25 percent the point where pricing improves noticeably. Cash-out refinances cap lower, generally 70 to 75 percent of value. Reserves of three to six months of full payment are typical and cannot be drained at the closing table. Closings commonly run two to three weeks, against thirty to forty-five days for a conventional investment loan.
On the ratio itself: 1.25 and above gets the best pricing and the maximum leverage. Between 1.10 and 1.25 still prices well at most lenders. Below 1.0 narrows the field to the programmes that allow it.
Investor and DSCR loans now account for roughly a third of non-QM lending volume, which is why the number of lenders quoting them has grown so quickly — and why comparing guidelines rather than rates has become the whole skill.
DSCR rental loans from 5.99 percent, $75,000 to $2 million, up to 80 percent of value, no minimum credit score, with cross-collateral allowed across two or more properties. Non-owner-occupied, business purpose, held in an entity.
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. Most programmes floor at 620 to 660; this one qualifies on whether the rent covers the payment.
Cross-collateral across two or more properties matters at the bottom of the price range. With a $75,000 minimum loan, a single low-basis rental in Cleveland or Detroit can fall under the floor on its own while two of them financed together clear it comfortably. If you are building a portfolio of inexpensive houses, that provision is often the difference between financing them and paying cash.
We also place fix and flip and bridge from 10.99 percent, ground-up construction from 8.5 percent, and commercial to $5 million. And there is a rate match: bring a fully executed letter of intent from a competing lender, no contingencies, meeting the same underwriting, and the interest rate gets matched. Rate only, and not a commitment to fund.
Dominion Hard Money does not lend its own funds. We arrange financing through a lending partner, which is the relevant fact here — when the question is which programme fits a file that has already been declined somewhere, working across programmes rather than defending one balance sheet is the point.
Run the numbers first so you are having a specific conversation rather than a general one. The DSCR calculator gives you the ratio, the full payment including taxes and insurance, and the loan amount that would reach 1.25.
Then ask every lender the same seven questions, which we set out on how to vet a lender. Ask us them too.
What matters is whether the lender can originate where the property is, not where you live or where they are headquartered. Ask directly whether they are active in that state.
Some programmes decline it outright and some fund it with larger reserves or a bigger down payment. It is a guideline question rather than a maths question, which is exactly why it pays to look at more than one programme.
Yes, and these loans are made to entities rather than individuals. A personal guarantee may still apply.
Commonly two to three weeks with the appraisal and documents ready, against thirty to forty-five days for a conventional investment property loan. Having the lease, insurance, entity documents and bank statements assembled before you apply is what actually shortens it.
No. Hard money is short-term money for buying and renovating, repaid by a sale or refinance. DSCR is long-term amortising 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.
Answer these and we will tell you whether it is fundable, on what terms, and how fast it could close. Investment property only — we do not lend on a home you will live in.
We will run the numbers and come back to you. If it is time-sensitive, call 903-636-7511.
Dominion Hard Money arranges private and asset-based real estate financing for business purposes only. Not a commitment to lend. All loans subject to underwriting, property review, and approval. Terms vary by property, borrower experience, and exit strategy.
Pennsylvania · Maryland · DSCR loans · Loan calculator · How to vet a lender