DSCR Rate and Term Refinance for Rental Properties
A rate and term refinance replaces the current loan on your investment property with a new one to change the interest rate, the loan term, or both, without taking cash out. With a DSCR rate and term refinance, the new loan is qualified on the rental income the property generates instead of your personal income or tax returns. Kala Lending LLC shops refinance options across multiple lenders to find terms that fit your property.
When a Rate and Term Refinance Makes Sense
- Lower your rate when market rates or your credit profile have improved
- Move from an adjustable-rate or interest-only loan to a fixed rate
- Replace a short-term bridge or hard money loan with long-term financing once the property is rented
- Change the loan term to lower the monthly payment or pay the loan off sooner
How It Differs From a Cash-Out Refinance
In a rate and term refinance, the new loan pays off the existing loan and closing costs, and you do not take equity out of the property. In a cash-out refinance, the new loan is larger than your current balance and the difference is paid to you. If your goal is to pull equity out for your next deal, see our Cash-Out Refinance page.
What Lenders Typically Look For
- Rental income: a lease or market rent schedule that covers the new payment
- Credit score: higher scores generally earn better pricing
- Equity: the current value of the property compared with the new loan amount
- Seasoning: how long you have owned the property or held the current loan
- Cash reserves: proof of funds to cover several months of payments
Frequently Asked Questions
Do I need tax returns? Typically not for a DSCR refinance. Lenders focus on the property’s income, but they still review credit, assets, and the property.
Can I refinance a property held in an LLC? Often yes, depending on the lender. Guarantor requirements vary.
Can I refinance out of a hard money loan? Yes, this is one of the most common reasons investors refinance. Seasoning requirements vary by lender.
Run Your Refinance Scenario
Contact Kala Lending or submit your deal.
Kala Lending LLC is a mortgage broker and not a direct lender. Loans are offered through third-party lenders. Loans are for business or investment purposes only and are not for personal, family, or household use. All loans are subject to underwriting approval. Rates, terms, leverage, and availability vary by lender, borrower, property, and state. This is not a commitment to lend or a rate quote.
Related pages: DSCR Loans | Cash-Out Refinance | DSCR Purchase Loans | Delayed Financing | All Loan Programs