Small-building owners in Burlington have long financed through local banks and credit unions on loans that reset or balloon every five or so years. When that date comes, a DSCR rate-and-term refinance offers a long-term fixed alternative that qualifies on the building, not the owner.
In short: LendingStreet refinances 1-8 unit rentals in Burlington and Chittenden County with DSCR rate-and-term loans that pay off bank balloons, hard money, bridge loans or an existing mortgage. Rate-and-term reaches up to 80% LTV on some programs, qualifies on rent with no W-2s or tax returns, and offers 30-year terms. The standard minimum DSCR is 1.0x and the minimum credit score is 620.
We see three situations most often. Owners of duplexes and triplexes with local bank loans that balloon or reset. Investors who bought and renovated an older house with short-term money and now have it leased. And owners who want a lower, steadier payment on a building they plan to hold for a long time.
Local bank loans often come with personal recourse terms, annual financial reporting and covenants tied to your other holdings. A DSCR loan qualifies on the building itself, which many owners find simpler to manage over the long term.
A rate-and-term refinance pays off existing debt plus closing costs, with little or no cash back. Because you are not taking equity out, some programs allow up to 80% LTV, above the 75% cash-out limit.
If you need a little cash for repairs as well, compare a cash-out refinance at 75% LTV side by side with rate-and-term before you decide.
| Feature | Rate-and-term | Cash-out |
|---|---|---|
| Pays off existing debt | Yes | Yes |
| Cash back | Little or none | Yes |
| Max LTV | Up to 80% on some programs | Up to 75% |
| Qualifies on | Property rent | Property rent |
This example is illustrative and not a quote. An owner has a South End duplex with a local bank loan balance of $365,000 and a balloon coming due. The duplex appraises at $610,000, and both units rent for $2,050, or $4,100 a month combined.
The new loan covers the payoff plus about $6,500 in closing costs, or $371,500, about 61% of value. Estimated principal and interest on a 30-year term is about $2,534. With taxes of $1,000 at the non-homestead rate and insurance of $240, the payment is about $3,774 and the DSCR is about 1.09x. The balloon is gone, and the payment is set for the long term.
Options if the ratio is tight include paying down the loan at closing, waiting for a rent increase to take effect, or a program below 1.0x. We can show each side by side.
| Item | Amount |
|---|---|
| Current balance with balloon | $365,000 |
| Appraised value | $610,000 |
| New loan with closing costs | $371,500 |
| Loan-to-value | 61% |
| New monthly payment | $3,774 |
| DSCR | 1.09x |
Burlington's combined tax bill on a rental, figured at the non-homestead education rate plus the municipal rate, is high relative to rents. In the example above, taxes are about a quarter of the payment. That is why many Burlington refinances land at moderate LTVs even when values are strong. If the ratio is tight, paying the loan down a little at closing or timing the refinance after a rent increase can help.
If you are refinancing out of a rehab loan, close out permits and inspections with the city first. The appraiser will want to see finished work, and the city's rental registry should reflect the correct unit count. For pre-1978 buildings, file your lead law compliance before you apply. Seasoning rules, which decide whether we use the new value or your cost, vary by program.
If the renovation added a unit, the city's approval and the registry must reflect the new count before the appraiser can value it as legal. Units that are not approved may not count toward rent or value.
Appraisals in Chittenden County can take time in busy seasons, and title work on older properties sometimes turns up old easements or discharges that need cleaning up. Start at least a couple of months before your maturity date. Ask your current lender for a payoff figure and any fees early.
If your current loan carries fees for early payoff or extension, get them in writing so you can compare the cost of refinancing early with the cost of waiting.
A complete file keeps the refinance on schedule.
If your current lender holds escrow for taxes or insurance, ask how and when it will be refunded after payoff, so you can plan your cash. Bring a recent tax bill and your current insurance declarations page as well.
The best time to plan a rate-and-term refinance is before you buy with short-term money. Estimate the after-renovation value, the market rents and the full payment at the non-homestead tax rate, then check whether the DSCR clears 1.0x at the loan you will need to pay off the short-term debt.
If the numbers only work at a higher LTV than the program allows, you will need cash at closing. Knowing that early lets you adjust your offer, your scope or your financing before you commit.
Burlington investors who repeat the cycle of buying, renovating, leasing and refinancing find each round smoother when the refinance is planned on day one, with permits, lead filings and leases lined up for the appraisal.
Get a quote with the form below or call (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property. See our Vermont rate-and-term page for statewide notes.
Yes. A DSCR rate-and-term loan can pay off the balloon and replace it with a 30-year term if the rent covers the payment.
Up to 80% on some rate-and-term programs. Larger balances and 5-8 unit buildings can have lower limits.
No. The loan qualifies on the property's rent compared with the full payment.
Usually property taxes. Rentals pay Vermont's non-homestead education rate plus the city rate, which is a large share of the payment.
Seasoning rules vary by program. Close out permits and inspections first.
Programs below 1.0x exist for properties that fall a little short, or you can pay the loan down at closing.
Yes. We lend on 1-8 unit rentals across Chittenden County.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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