Many investors start by keeping the house they are moving out of. A DSCR loan can refinance it as a rental, but only after it truly becomes one.
In short: Yes, a DSCR loan can refinance a home you are moving out of and keeping as a rental, once it is no longer your residence. DSCR loans are for non-owner-occupied investment property only, so by closing you must have moved out and the home must be leased or ready to lease. The loan qualifies on the property's rent, with up to 75% LTV on a cash-out refinance, a 620 minimum credit score and no W-2s or tax returns. LendingStreet does not finance the home you are moving into.
LendingStreet offers business-purpose loans on investment property only. A DSCR loan cannot be used on a home you live in, plan to keep living in, or will move back into. At closing you will sign documents certifying that the property is not your residence and the loan is for business purposes. Those statements have to be true.
If you have not moved yet, or you are not sure whether you will keep the home as a rental, wait. A DSCR refinance is the right tool after the move, not before it.
Investors often call this a departing or departure residence: the home you are leaving becomes your next rental. The typical order of events looks like this, though timing varies by person and by program.
Lenders want to see that the home is now a rental. A signed lease with a start date, a security deposit and first month's rent going into your account, and a change of address all help show that. The appraiser also estimates market rent, and lenders often compare the lease to that figure.
Some programs can qualify a vacant home on the appraiser's market rent, but a signed lease usually makes the file cleaner. If your homeowner's insurance is still an owner-occupied policy, switch to a landlord or rental dwelling policy before closing.
A cash-out refinance lets you pull equity from the home, up to 75% LTV, often to fund a down payment on another rental. A rate-and-term refinance replaces the existing mortgage without taking cash out, which can mean a lower loan amount and a stronger ratio.
Cash-out programs may have ownership or seasoning requirements. If you have owned the home for a while, that is often not an issue. Our page on DSCR cash-out seasoning covers the details.
| Goal | Usual structure | Things to check |
|---|---|---|
| Take equity out | DSCR cash-out refinance | Up to 75% LTV; seasoning; DSCR at the higher loan |
| Replace the existing loan | DSCR rate-and-term refinance | Payoff amount; DSCR; prepayment terms |
| Keep existing loan | No refinance | Your current lender's occupancy terms; landlord insurance |
This example is illustrative and not a quote. An investor moves to a new home and keeps the old one, now appraised at $400,000 with $210,000 owed. They sign a 12-month lease at $2,800 a month.
A cash-out refinance at 75% LTV gives a loan of $300,000. After paying off the $210,000 mortgage and sample closing costs of $8,000, about $82,000 comes back to the investor.
At a sample rate of 7.5% on 30-year amortization, principal and interest is about $2,098. With $500 a month for taxes and insurance, the payment is about $2,598, and DSCR is about 1.08x. If the ratio came in short, a smaller cash-out or a rate-and-term refinance would lower the payment.
Many investors want the rental in an LLC. DSCR loans allow LLC borrowers, and the refinance may be a natural time to move title into the entity. The title company handles the deed, and you should ask your attorney or tax advisor about any effects of transferring title.
If you keep title in your personal name, the loan is still a business-purpose loan on investment property.
Gather the signed lease and proof of the deposit, proof of your new address, the current mortgage statement, the landlord insurance quote, entity documents if using an LLC and bank statements for reserves. Our financing team can review the scenario and come back with 2–3 options once the home is a rental.
Only after it stops being your home. DSCR loans are for non-owner-occupied investment property, so you must have moved out and the property must be a rental at closing.
A signed lease usually makes the file cleaner. Some programs can qualify a vacant home on the appraiser's market rent, but requirements vary by program.
No. We finance investment property only. For the home you will live in, you would need a consumer mortgage lender.
It varies. You need to have moved out and the home should be leased or ready to lease. Cash-out programs may also have ownership seasoning requirements.
No. DSCR loans qualify on the property's rent. No W-2s or tax returns are required, though credit and reserves are still reviewed.
Yes, up to 75% LTV on a cash-out refinance, as long as the rent supports the higher payment. Many investors use that cash toward their next purchase.
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