Connecticut's two- and three-family houses in Hartford, New Haven, Bridgeport and Waterbury are some of the most investor-owned buildings in New England. A DSCR cash-out refinance turns their equity into cash using the building's rents.
In short: LendingStreet offers DSCR cash-out refinances on Connecticut rentals of 1 to 8 units, lending up to 75% of appraised value and qualifying on rent, not W-2s or tax returns. Loans start at $150,000 and the standard minimum DSCR is 1.0x. In Connecticut, high local mill rates and town revaluations shape the payment, and in parts of the state the foundation question needs an early answer.
A cash-out refinance replaces your existing loan with a larger one. The appraisal sets the value, the program caps the loan at up to 75% of it, and whatever is left after the payoff and closing costs comes to you.
Approval rests on the rent, not your income. Divide the monthly rent by the new principal, interest, taxes, insurance and HOA dues; on standard programs that ratio needs to be at least 1.0x after the new, higher balance is in place. Credit, reserves and the property itself still matter, but your personal income does not.
Older multi-family homes define much of Connecticut's rental market. Hartford and New Britain have three-deckers and side-by-side two-families, New Haven has multi-unit houses near Yale and the medical district, and Bridgeport, Waterbury, Norwalk and Stamford mix multi-family homes with condos.
Many of these buildings are a century old, with separate meters, older heating systems and lead paint risk. Small 5-8 unit buildings also appear in the older cities and qualify under residential DSCR programs, with leverage that varies by program.
Connecticut's state and municipal conveyance taxes are charged on deeds when property is sold, so they do not usually apply to a refinance. Closings in Connecticut are customarily handled by attorneys, and you will see their fee along with title, recording and lender costs.
Your term sheet and closing disclosure list lender costs separately from title, recording and government charges, so you can see exactly what the cash-out costs and how much of the equity reaches you.
| Closing item | How it usually works in Connecticut |
|---|---|
| Conveyance tax | Paid by the seller on sales; not usually on a refinance |
| Mortgage tax | No state mortgage tax |
| Attorney and title | Closing attorney fee and lender title policy |
| Town recording fees | Town clerk fees to record the new mortgage |
| Escrow setup | Deposits for town taxes and insurance |
Connecticut property taxes are set town by town, and some cities carry high mill rates. Towns revalue property on a five-year cycle, and a recent revaluation can raise the bill noticeably, which feeds directly into the payment on your new loan.
Look up the property's assessment and the town's current mill rate, and ask whether a revaluation is coming. On multi-family homes in cities with high rates, taxes are often the largest expense after principal and interest.
Insurers look closely at the age of the roof, wiring and heating systems on older multi-family homes. Updated electrical and a newer boiler can make a difference in both price and availability.
Shoreline towns from Greenwich to Old Saybrook and beyond have flood zones, and storms like Sandy in 2012 brought damage to parts of the coast. If the property is in a mapped flood zone, flood insurance is generally required and counts in the payment.
This example is illustrative and not a quote. An investor owns a three-family in the Hartford area appraised at $450,000 with $200,000 left on the current loan. The three units rent for $1,500 each. Rent is $4,500 a month and town property taxes and insurance come to $1,150 a month.
At 75% LTV the new loan is $337,500. Paying off the $200,000 balance leaves $137,500 before closing costs. On a 30-year term, principal and interest is about $2,331, so the full payment is about $3,481 and the DSCR is about 1.29x, above the 1.0x standard minimum.
Put another way, rent would have to fall below about $3,481 a month before this loan dropped under 1.0x, a cushion of roughly $1,019 a month. Running the same check on your own numbers shows how much cash the rent can actually support.
If a revaluation added $300 a month to the tax bill, the ratio would fall to about 1.19x, still above the minimum but with less room.
| Item | Amount |
|---|---|
| Appraised value | $450,000 |
| Loan at 75% LTV | $337,500 |
| Existing loan payoff | $200,000 |
| Cash before closing costs | $137,500 |
| Principal and interest | About $2,331 |
| Taxes and insurance | $1,150 |
| Total monthly payment | About $3,481 |
| DSCR at $4,500 rent | About 1.29x |
Thousands of homes in northeastern and north-central Connecticut, especially in Tolland and Windham counties and nearby towns, were built with concrete containing pyrrhotite, which can cause foundations to crack and deteriorate over time. The state set up a program to help homeowners with repairs.
If your rental was built in the affected era and area, expect questions about foundation testing or repairs. Have any core test results or repair records ready, since they can affect value and eligibility.
If you bought or finished a rehab recently, the seasoning rules matter. Depending on the program, a recent purchase may qualify on the appraised value right away, or the loan may be held to cost plus documented improvements for the first several months.
Your cash is the smaller of what 75% LTV allows and what the rent can carry at 1.0x or better. Larger loans and 5-8 unit buildings can have lower LTV caps, which vary by program.
If you are unsure which limit applies to you, send the purchase date, rehab costs and rent through the form below and we will run both.
Having these ready shortens the timeline and avoids surprises at the appraisal.
Yes. We finance DSCR cash-out refinances on non-owner-occupied 1-8 unit rentals in Connecticut, including two- and three-family homes, up to 75% LTV.
Generally no. The conveyance tax is paid on deeds when property is sold. A refinance mainly carries attorney, title, recording and lender costs.
It depends on testing and the condition of the foundation. Share test results and repair records early so the file can be reviewed before you spend on an appraisal.
A revaluation can change the assessment and the tax bill, which changes the escrow and the ratio. Use the most recent assessment and ask the town about upcoming changes.
No. The loan qualifies on the property's rent. You will still need a 620 or higher credit score, reserves and entity documents if the property is held in an LLC.
It depends on the program. Some allow cash-out shortly after purchase; others require several months of ownership or limit the loan to cost plus documented improvements. Our seasoning guide covers the details.
Yes. Residential DSCR programs cover 1 to 8 units. On 5-8 unit properties the maximum LTV can be lower and varies by program.
You can take a smaller loan to bring the ratio up, or look at sub-1.0 DSCR programs, which exist for some properties and borrowers with stronger profiles.
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