A new home from a builder means fewer repairs and easier tenants. It also means no rent history, a closing date that depends on the builder, and incentives that come with their own rules.
In short: Yes, LendingStreet finances newly built homes bought from a builder as rentals through our DSCR programs, with up to 80% LTV on purchases, a 620 minimum credit score and LLC borrowing allowed. Because the home has never been rented, qualifying rent usually comes from the appraiser's market rent schedule. The loan closes once the home is complete and has its certificate of occupancy or local equivalent. Builder incentives and seller credits are often allowed toward closing costs, but the limits vary by program.
A DSCR loan qualifies on the property's rent. A brand-new home has no lease and no history, so the appraiser completes a comparable rent schedule that estimates market rent from similar rentals nearby. That figure is usually what goes into the ratio.
In a new subdivision, the best rent comparables may be other new homes that just leased. If the community is so new that there are few rentals yet, the appraiser may need to use older homes nearby, which can pull the estimate down. Having a signed lease ready at closing can help on some programs, but lenders often still compare it to the appraiser's market rent.
Builders often offer incentives to close inventory: closing cost credits, upgrades, appliance packages or a price reduction. For financing, the question is how each one is treated.
Credits toward your closing costs are commonly allowed up to a limit set by the program, and generally cannot exceed your actual closing costs. Incentives that are not closing costs, such as furniture or cash back, may be deducted from the price for loan-sizing purposes. Some incentives are tied to using the builder's affiliated lender and may be designed for buyers who will live in the home. Ask the builder in writing which incentives apply to an investor purchase with outside financing.
Your DSCR loan funds a finished home, not the build. The home typically must be complete, with a certificate of occupancy or the local equivalent, before closing. The appraiser may do the initial report from plans and then a final inspection once construction is done.
Builder completion dates slip. Plan for it:
Property taxes on a new home are often based on the land value only until the county reassesses the finished house. Lenders usually estimate taxes on the completed value, so expect the tax figure in your DSCR to be higher than the current bill. New communities also often have an HOA, and those dues are part of the payment in the ratio.
Some builders develop communities intended mostly for rentals, or sell several homes in a phase to investors. These can work well with DSCR loans, and investors buying several homes may be able to combine them in a blanket portfolio loan once they own five or more.
Some programs look closely at concentration, such as how many homes in a new community are investor-owned or how many loans one investor has in the same subdivision. Appraisals can also be harder when many similar homes are selling and leasing at once. Share the full plan up front so our financing team can match it to the right program.
This example is illustrative and not a quote. An investor buys a newly completed home from a builder for $360,000. The appraisal's rent schedule shows market rent of $2,500. Estimated taxes and insurance are $600 a month, and HOA dues are $60.
At 80% LTV, the loan is $288,000. At a sample rate of 7.125% on 30-year amortization, principal and interest is about $1,940, the full payment is about $2,600, and DSCR is about 0.96x. At 75% LTV, the loan is $270,000, principal and interest is about $1,819, the full payment is about $2,479, and DSCR is about 1.01x.
At 75% LTV, the down payment is $90,000. With sample closing costs of $12,000 and a $9,000 builder credit toward those costs, cash needed at closing is about $93,000, before reserves.
If you are buying a lot and having a home built, or building yourself, a DSCR loan is the second step, not the first. Ground-up construction financing covers the build, with rates from 10.00% and up to 85% LTC, and a DSCR refinance can follow once the home is complete and leased. Our construction-to-DSCR guide walks through that path.
Gather the builder's purchase contract and any addenda listing incentives and credits, the estimated completion date, HOA details, your entity documents and bank statements for down payment and reserves. Our financing team can review the contract before you lock and come back with 2–3 options if it qualifies.
Usually from the appraiser's comparable rent schedule, which estimates market rent from similar rentals nearby. That market rent is typically what goes into the DSCR.
Often, yes. Credits toward closing costs are commonly allowed up to a program limit. Incentives that are not closing costs may reduce the price used to size the loan. Rules vary by program.
After the home is complete and has its certificate of occupancy or local equivalent, and the appraisal and final inspection are done.
No, though some incentives may be tied to the builder's affiliated lender. Ask the builder which incentives still apply if you use outside financing.
Often, yes. Some programs review investor concentration in new communities. If you own five or more rentals, a blanket portfolio loan may be an option.
Often. Many new homes are taxed on land value until the county reassesses the finished home. Lenders usually estimate taxes on the completed value for the DSCR calculation.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
By clicking, you provide express written consent to be contacted by LendingStreet (NMLS #1734316) via SMS, phone, or email, possibly using automated technology, regarding your loan inquiry. Reply STOP to opt out. Consent is not required to obtain services. See our Privacy Policy and Terms.