Many Lancaster County landlords financed their rentals through local banks on shorter amortizations with balloon dates. When the balloon comes due, or the payment on a 15-year schedule squeezes cash flow, a 30-year DSCR loan is a common replacement.
In short: LendingStreet refinances 1-8 unit rentals in Lancaster and across Lancaster County into DSCR loans that pay off a balloon or bank loan, a hard money or bridge loan, or another mortgage, qualified on the property's rent rather than personal income. Rate-and-term refinances go up to 80% LTV on some programs, 30-year terms are available, the standard minimum DSCR is 1.0x and the minimum credit score is 620.
The first is a balloon or reset date on a community bank loan. Those loans often amortize over 15 or 20 years and come due in five or seven, and renewing may mean new terms and a new review of your personal finances. The second is a short-term rehab or bridge loan on a property that is now finished and leased. The third is simply payment relief: stretching a loan over 30 years can free up monthly cash flow even without a lower cost of funds.
In each case, a DSCR loan qualifies on the property's rent, so you do not need to show personal income or business returns.
That matters in Lancaster County, where many landlords are farmers, tradespeople and small business owners whose tax returns show modest income after depreciation and expenses. The property's lease, not the Schedule E, carries the file.
A rate-and-term refinance pays off your existing loan and closing costs without taking meaningful cash out. Because no equity leaves the property, leverage can go up to 80% LTV on some programs, higher than the 75% cash-out limit. Max LTV can be lower on 5-8 unit properties and larger balances and varies by program.
This example is illustrative and not a quote. An investor owns a duplex in Elizabethtown worth $410,000. The remaining bank loan balance is $265,000, amortizing over its last 15 years with an estimated principal and interest payment of about $2,571 a month, and the balloon date is next year. The two units rent for a combined $2,900; taxes are $430 a month and insurance $120.
A new DSCR loan of $271,500 covers the payoff and about $6,500 in closing costs, about 66% of value. Spread over 30 years, estimated principal and interest is about $1,875, for a total payment of about $2,425 and a DSCR of about 1.20x. The old total payment was about $3,121, so monthly cash flow improves by about $696 and the balloon date goes away.
| Item | Existing bank loan | New DSCR loan |
|---|---|---|
| Balance | $265,000 | $271,500 |
| Remaining amortization | 15 years with balloon | 30 years |
| Estimated principal and interest | $2,571 | $1,875 |
| Taxes and insurance | $550 | $550 |
| Total monthly payment | $3,121 | $2,425 |
| DSCR at $2,900 rent | About 0.93x | About 1.20x |
A 30-year schedule lowers the payment, but you build equity more slowly than on a 15-year schedule and pay interest over a longer period. Many investors accept that tradeoff because lower payments improve cash flow, make the property easier to carry through vacancies and repairs, and leave room to buy more. If you prefer to keep paying down faster, you can usually pay extra principal; confirm the terms of your specific loan.
A long-term fixed structure also removes renewal risk. When a balloon comes due, the renewal terms depend on the bank's appetite at that moment. A 30-year DSCR loan replaces that uncertainty with a known payment you can plan around.
If you renovated a city rowhome or twin with a short-term loan, refinance once the work is complete, the unit has passed any required rental inspection and a tenant has signed. Bring finished photos, the lease, the rental permit and your rehab scope. The appraiser will compare against recently renovated homes nearby, so share any comparable sales you know about. Restored original details such as woodwork and brick can help a rowhome stand out.
Start at least six to eight weeks before your short-term loan matures. Appraisal scheduling, title work and the rental inspection calendar can all add time.
There is no realty transfer tax on a refinance because the deed stays where it is, and Pennsylvania has no mortgage recording tax. Expect an appraisal, title insurance, settlement and recording fees, a payoff that includes interest through the payoff date, and escrow deposits for taxes and insurance.
Rate-and-term refinances are generally more flexible on seasoning than cash-out, but programs still look at ownership time when the appraised value is well above what you paid. Our seasoning guide covers common rules. If the appraisal comes in low, you can still refinance within the LTV limit, or bring a small amount of cash to closing.
Owners who are replacing several balloon loans at once may want to look at a blanket portfolio loan for five or more properties, with one closing, one payment and release provisions for future sales. It can also make sense to refinance only the properties whose balloons are coming due and leave the rest in place, especially if some existing loans carry terms you would rather keep.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, payoff statement, leases, tax bills and estimated value through the form below, or call (877) 298-1001. For statewide context, see our Pennsylvania rate-and-term refinance page.
Yes. A DSCR loan can pay off the balloon and replace it with a 30-year term, qualified on the property's rent.
Up to 80% LTV on some programs. It can be lower on 5-8 unit properties and larger balances and varies by program.
No. Pennsylvania realty transfer tax applies to deed transfers, not to refinancing a property you already own.
Often, if you move from a shorter amortization or interest-only short-term loan to a 30-year term. The exact result depends on your balance, value and the new terms.
Yes, once the work is done and the property is leased or ready to lease, with any required rental permit and inspection in place.
No. The loan qualifies on the property's rent, with a 620 minimum credit score.
Often yes, but moving the deed into an LLC should be planned with your attorney or title company, since transfer tax treatment depends on how it is done.
You can lower the loan amount with cash at closing, or ask about a sub-1.0 DSCR program where available.
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