A lot of Little Rock rental debt sits on short leashes: hard money from a rehab, a bridge loan from a package purchase, or a local bank loan with a five-year balloon. A rate-and-term refinance swaps any of those for a long-term loan that qualifies on the rent.
In short: LendingStreet's DSCR rate-and-term refinance pays off hard money, a bridge loan or an existing mortgage on a Little Rock 1-8 unit rental and replaces it with a long-term loan that qualifies on the property's rent. Rate-and-term goes up to 80% LTV on some programs, 30-year terms are available, the minimum credit score is 620 and LLC borrowers are standard. The new loan must be at least $150,000.
Many Little Rock investors finance rentals through local banks on commercial-style terms: a shorter amortization, a balloon after a few years and periodic re-pricing. Those loans can work well, but each maturity date forces a decision. A 30-year DSCR loan removes that cycle on a property that already rents.
Others come to a rate-and-term refinance after a rehab financed with hard money, or after a bridge loan used to buy a package of rentals.
Local bank financing has helped many central Arkansas investors grow, and some will keep part of their portfolio there. The common reason to refinance into a DSCR loan is predictability: a 30-year term, a payment that does not reset on a short cycle, and qualification on the property's rent instead of a relationship review of your entire balance sheet.
A rate-and-term refinance is also how many BRRRR investors in Little Rock finish the cycle. They buy a dated house, renovate it with short-term money, lease it and refinance into a long-term loan.
This example is illustrative and not a quote. An investor renovated a Hillcrest bungalow with hard money and leased it for $2,350 a month. The payoff is $236,000, with estimated interest-only payments of about $2,163 a month.
The home appraises at $315,000, so the payoff is about 75% of value, within the 80% rate-and-term limit on some programs. A 30-year DSCR loan for the payoff has estimated principal and interest of about $1,626. With taxes of about $354 and insurance of $185, the payment is about $2,165, and DSCR is about 1.09x, above the 1.0x standard minimum.
Notice that the refinance replaces an interest-only payment with an amortizing one. Even when the monthly figure is similar, each payment now reduces the balance, and the maturity date is decades away instead of months.
The refinance changes the loan's structure as well as its payment.
| Item | Hard money, bridge or balloon | DSCR rate-and-term |
|---|---|---|
| Payment | Interest-only or short amortization | Principal and interest over 30 years |
| Estimated monthly debt payment in the example | $2,163 | $1,626 |
| Maturity | Months to a few years | Up to 30 years |
| Approval basis | Project, asset or bank relationship | Property rent, 1.0x standard minimum |
| Minimum size | Varies | $150,000 |
A rate-and-term refinance pays off existing debt and closing costs without significant cash to you, so some programs allow up to 80% LTV, and seasoning is usually simpler. A cash-out refinance goes up to 75% LTV with seasoning rules that vary by program. Many investors refinance rate-and-term after a rehab and return for cash later.
Make sure renovation permits are closed with the City of Little Rock or the relevant city, and keep records of any Historic District Commission approvals if the property is in a local historic district. Switch the vacant-rehab insurance policy to a landlord policy with storm coverage before closing.
Use your current tax bill without a homestead credit. If the county's reappraisal raised the assessed value, budget on the new figure.
If a storm damaged the property during the rehab or after leasing, finish the repairs and close the insurance claim before you apply. Appraisers note visible damage, and underwriters will ask about open claims.
Arkansas's minimum habitability rules apply to leased homes, so make sure systems are working and documented when the appraiser visits.
If your payoff is below $150,000, a single-property DSCR refinance will not fit our minimum. Options include refinancing a higher-value property, combining five or more rentals into a blanket portfolio loan, or paying the small loan down from other proceeds.
Investors with several small hard money or bank loans sometimes consolidate them into one portfolio loan rather than refinancing each separately. Our page on consolidating hard money into a portfolio loan explains the approach.
Start 45 to 60 days before the short-term loan or balloon matures. If the ratio is just under 1.0x, a sub-1.0 DSCR program, a small paydown or a lease renewal at market can help.
A strong lease helps. If your tenant signed a 12-month lease at market rent after the rehab, include it with your application and proof of the first months' payments.
If the property sits near the loan minimum, a slightly higher appraisal after finishing the last repairs can make the difference. Complete the punch list before the appraiser visits.
The same refinance works across central Arkansas. In Jacksonville and Cabot, rentals near the Little Rock Air Force Base often lease to military families, and many owners there financed with short-term local loans. In Conway, rentals near the universities may lease on academic calendars. Time your refinance so a signed lease is in place, and use the tax bill and millage for the specific city and school district.
Our investor loans are business-purpose loans on non-owner-occupied property. Send your payoff letter, lease, value estimate and maturity date through the form below or call (877) 298-1001.
Yes, on a 1-8 unit rental if the new loan is at least $150,000 and the rent covers the payment at about 1.0x or better.
Up to 80% LTV on some programs. Larger balances and 5-8 unit buildings may have lower limits.
Yes, once the property is finished and leased.
A single-property DSCR refinance will not fit. A blanket portfolio loan on five or more rentals may work.
Not directly, but keep records of approvals for exterior work. Appraisers and underwriters may ask about renovations.
The standard minimum is 1.0x. Sub-1.0 programs exist for properties slightly under.
No. Our investor loans are business-purpose loans on non-owner-occupied property. The property has to be a rental or investment project, not your residence.
Five or more rentals can often be combined into one blanket portfolio loan with one payment and release provisions.
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.