Waco's rental market draws on Baylor, the hospitals and a tourism boom that has made the city a weekend destination. Older homes near campus and in Sanger Heights sit alongside newer subdivisions in Hewitt and Woodway, and the clay soil under all of them shapes repair budgets.
In short: LendingStreet makes short-term, interest-only bridge loans on 1-8 unit investment property in Waco and across McLennan County, from $150,000 to $5M+ with rates from 7.99%. Loans can close in as little as 10 days, and some programs need no appraisal. Waco investors use the bridge to buy homes near Baylor or older houses needing work, then refinance into a DSCR loan once leased.
The neighborhoods around Baylor rent to students and staff, often in older homes and small multi-unit buildings. Sanger Heights and Castle Heights have older homes with character, while North Waco and East Waco offer lower-priced rentals.
Hewitt, Woodway, Robinson and China Spring carry higher prices and newer homes, with family renters drawn by the school districts. The Magnolia complex downtown and the city's growing visitor trade have pushed prices up in some older neighborhoods, while hospital and Baylor employment keep long-term demand broad.
| Area | Typical property | How investors use a bridge |
|---|---|---|
| Near Baylor | Older homes and small multis | Student rentals leased by semester |
| Sanger Heights, Castle Heights | Older homes with character | Buy, update, lease |
| North and East Waco | Lower-priced singles | Packages of rentals |
| Hewitt, Woodway | Newer suburban homes | Quick purchase before a DSCR refinance |
Student rentals sell with leases tied to the academic year. A bridge loan buys before fall and gives you time to lease, then a DSCR refinance sizes on full rent.
Older homes often need foundation or systems work before they rent at market, and a short loan gives you time to finish it. A long-term lender sizes on the property as it stands, so finishing repairs first usually means a better value and a stronger ratio at refinance.
Every Waco file is sized individually, but the outline does not change much from deal to deal. For statewide notes, including Texas closing costs, see our Texas bridge loan page.
We look hardest at the exit. Before closing, we want to see that the expected rent supports a DSCR refinance at 1.0x or better, or that recent sales support your resale price. A clear exit is what makes a short loan work.
| Item | Detail |
|---|---|
| Size | $150,000 to $5M+ |
| Starting rate | Rates from 7.99% |
| Fastest close | As little as 10 days |
| Value check | Some bridge programs need no appraisal |
| Payment type | Interest-only for a short term |
| What we finance | 1-8 unit rentals and investment homes |
| Exit plan | Sale or a DSCR refinance |
This example is illustrative and not a quote. An investor buys a duplex near Baylor with both units vacant over the summer, paying $280,000. A $210,000 bridge loan covers part of the price, so the investor brings $70,000 plus closing costs. Because the loan is interest-only, the estimated monthly interest payment is about $1,750. Over about 3 months, the investor repairs the foundation, updates both units and leases them for the fall.
Once leased, with two units at about $1,600 each, rent totals $3,200 a month and the property appraises at $330,000. A DSCR cash-out refinance at 75% LTV is $247,500, which pays off the bridge and returns about $37,500 before closing costs. Estimated principal and interest on a 30-year loan is about $1,688. Adding taxes and insurance of about $800 a month brings the payment to about $2,488, so DSCR is about 1.29x, above the 1.0x standard minimum.
| Item | Amount |
|---|---|
| Purchase price | $280,000 |
| Bridge loan | $210,000 |
| Estimated monthly interest-only payment | $1,750 |
| Value after leasing | $330,000 |
| DSCR cash-out loan at 75% LTV | $247,500 |
| Cash back after bridge payoff, before closing costs | $37,500 |
| Estimated principal and interest | $1,688 |
| Taxes and insurance, monthly | $800 |
| Total monthly payment | $2,488 |
| Monthly rent | $3,200 |
| DSCR | About 1.29x |
Texas has no state income tax and relies on property taxes. A Waco rental may be taxed by the county, city, school district and other units, and investors do not get homestead exemptions. Pull the full breakdown from the McLennan County Appraisal District.
Texas has no state transfer tax or mortgage recording tax, which keeps the cost of closing twice, once on the bridge and again on the refinance, lower than in many states. Title insurance premiums are set by the state, and title companies handle the closing.
Central Texas sits on expansive clay soils that swell and shrink with moisture, and foundation movement is common in older homes. Get a foundation inspection and budget for repairs.
Hail is common across central Texas, so check roof age and wind and hail deductibles. Waco requires permits for short-term rentals and adds stricter rules for non-owner-occupied rentals in residential zones, so confirm before counting on nightly income. Lake Waco and the Brazos River also bring flood zones to some low areas, so check the FEMA map.
Most Waco bridge loans end in a DSCR refinance, because Baylor and hospital demand keep rents steady. Selling a renovated home in Castle Heights or Sanger Heights to a homebuyer is another option, especially where recent sales support your price.
If you refinance, the DSCR loan qualifies on the property's rent rather than your tax returns. The standard minimum DSCR is 1.0x, the minimum credit score is 620, cash-out goes up to 75% LTV and rate-and-term up to 80% LTV on some programs. Cash-out seasoning varies by program, so ask before you set your timeline.
We review bridge requests across McLennan County and nearby central Texas counties. Our investor loans are business-purpose loans on non-owner-occupied property. A complete package gets a faster answer; call (877) 298-1001 or get a quote with the form below.
Expansive clay soils cause foundation movement in many older homes. An inspection from a structural engineer or foundation company helps you budget repairs before you commit to a price.
Only with a city permit, and non-owner-occupied rentals face stricter rules in residential zones. Most Waco bridge loans are planned around a long-term lease, which is also how the DSCR refinance is usually underwritten.
No. Texas has no state transfer tax or mortgage recording tax. Property taxes are the bigger cost, and investors do not get homestead exemptions.
Yes. We finance 1-8 unit investment property across McLennan County, including Hewitt, Woodway, Robinson and China Spring.
It depends on the program. Some bridge programs need no appraisal, while others order one. Expect an appraisal on the later DSCR refinance.
No. Our investor loans are business-purpose loans on non-owner-occupied property only.
Those are commercial loans. This page covers 1-8 unit residential investment property; see our commercial and multifamily pages for larger buildings.
Yes. Many borrowers move from our bridge loan into one of our DSCR loans once the property is leased, qualifying on rent rather than personal income.
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