Many Montana rentals were bought or rebuilt with short-term money, from Bozeman and Missoula to Billings and the Flathead Valley. Once the work is done and the unit is leased, a DSCR rate-and-term refinance swaps that loan for long-term financing sized on the rent.
In short: Yes, LendingStreet offers DSCR rate-and-term refinances on 1-8 unit investment property in Montana, up to 80% LTV on some programs, qualifying on the property's rent instead of your income. It is the standard way to pay off a hard money, bridge or higher-rate loan and move into a long-term payment, with cash back limited to a small allowance. The rent has to cover the new payment at 1.0x on standard programs, the minimum credit score is 620, LLC borrowers are standard and loans start at $150,000.
A rate-and-term refinance replaces the loan you have now with a new one, usually to get a lower rate, a longer term or a fixed payment. The new balance is sized to pay off the existing loan plus closing costs, and it can go up to 80% LTV on some programs, compared with up to 75% on a cash-out. Cash back at closing is limited to a small amount set by the program.
The loan qualifies on the debt service coverage ratio, the property's rent divided by the full monthly payment: principal, interest, taxes, insurance and any HOA dues. Standard programs look for 1.0x or better, and sub-1.0 programs exist for rentals that fall a little short. There are no W-2s or tax returns, the minimum credit score is 620, LLC borrowers are standard and 30-year terms are available.
| Rate-and-term | Cash-out | |
|---|---|---|
| Max LTV | Up to 80% on some programs | Up to 75% |
| Cash to borrower | Small allowance only | Equity above payoff |
| Typical goal | Lower rate or payment, exit short-term debt | Pull equity for the next deal |
| Qualifies on | Rent (DSCR) | Rent (DSCR) |
Short-term loans are built to be replaced. They are interest-only, priced higher and due on a short maturity. Once the rehab is finished and a tenant is signed, a rate-and-term DSCR loan pays off that balance and puts the property on a long-term amortizing payment.
Montana's rental stock is a mix: older wood-frame homes and small multifamily in Butte, Great Falls and Helena, newer construction around Bozeman and Billings, and rural or mountain properties on acreage. Many investors use hard money to buy and update an older house, then refinance once a tenant is in place.
Rural and mountain properties can bring wells, septic systems and long private roads into the appraisal. Properties with significant acreage or limited comparable sales may have fewer options, so mention those details early.
Montana does not impose a general real estate transfer tax, and on a refinance the deed usually does not change hands anyway. Expect title insurance on the new loan, county recording fees for the new deed of trust and the usual settlement charges.
Montana commonly uses deeds of trust for residential property. Your title company will clear the existing lien when the payoff funds and record the new one. If the property sits in a rural subdivision or has easements for access, ask title to review them early so they do not hold up closing.
Your term sheet will show lender costs separately from title and government charges. Confirm the final figures with your title company or closing attorney.
Montana property taxes are assessed by the state Department of Revenue and billed by the county, and recent reappraisals have pushed some bills up noticeably. Use the current tax bill, not an older one, when you estimate the new payment. Wildfire exposure in parts of western Montana and hail on the plains can affect insurance quotes, so get a fresh quote before you apply.
Every dollar of tax and insurance lowers the ratio the same way a higher rate would. If the numbers are tight, a better insurance quote or a corrected tax figure can be the difference between clearing 1.0x and falling short.
This example is illustrative and not a quote. An investor bought and renovated a Missoula single-family rental using a hard money loan that now has a payoff of $318,000 interest-only, or about $3,048 a month in interest. The property now appraises at $450,000 and rents for $3,150 a month, with taxes and insurance of about $640 a month.
A rate-and-term loan of $327,000 covers the payoff plus $9,000 of closing costs, which is about 72.7% LTV, inside the 80% limit some programs allow. On 30-year amortization, principal and interest is about $2,176, so the total payment is about $2,816 and the DSCR is about 1.12x, above the 1.0x standard minimum. The investor stops paying short-term interest and starts paying down principal, with no cash taken out.
| Item | Amount |
|---|---|
| Appraised value | $450,000 |
| Hard money payoff | $318,000 |
| Closing costs financed | $9,000 |
| New loan amount | $327,000 |
| Loan-to-value | About 72.7% |
| Principal and interest | About $2,176 |
| Taxes and insurance | $640 |
| Total monthly payment | About $2,816 |
| Monthly rent | $3,150 |
| DSCR | About 1.12x |
Seasoning varies by program. Some will refinance soon after purchase using the new appraised value; others want several months of ownership or cap the loan at purchase price plus documented improvements. On a rate-and-term refinance this matters less than on a cash-out, but it can still limit the loan if you bought recently.
The appraiser will also estimate market rent. Underwriting generally uses the lease rent, the market rent estimate or the lower of the two, depending on the program, so a signed lease at a realistic rent helps.
Bozeman and the Gallatin Valley have high prices and tight rental supply, so ratios there tend to be thinner. Missoula draws investors with university-area demand. Billings, Montana's largest city, and Great Falls usually offer lower prices relative to rent, which can make the ratio easier to clear.
Kalispell, Whitefish and the area near Glacier National Park, along with Big Sky, have active short-term rental markets. Local rules vary by city and county, and some resort areas have tightened them, so confirm what is allowed before you count on nightly income.
Having these ready before you apply keeps the appraisal and underwriting moving.
If the property has gained a lot of value and you want to fund the next purchase, a cash-out refinance up to 75% LTV may fit better. If the rent does not yet cover the payment, finishing the lease-up first, or looking at a sub-1.0 DSCR program, is usually smarter than forcing the numbers. Larger 5-8 unit properties may also see lower maximum LTV, which varies by program.
Yes. Our investor loans are business-purpose loans on non-owner-occupied property, and we offer DSCR rate-and-term refinances on 1-8 unit rentals across Montana, starting at $150,000.
Up to 80% LTV on some programs. Maximum LTV can be lower on 5-8 unit properties and larger balances, and it varies by program.
Only a small amount set by the program. If you want to pull equity out, a cash-out refinance up to 75% LTV is the better option.
Montana does not have a general real estate transfer tax. You will still pay title insurance, recording fees and settlement charges, so ask your title company for an estimate.
Often, yes, but large acreage, limited comparable sales and access issues can narrow the options. Share the lot size, water and septic details and road access up front.
It depends on the program. Some use the new appraised value soon after purchase; others base the loan on purchase price plus documented improvements until a seasoning period passes.
Standard programs look for 1.0x, meaning rent at least equals the full payment. Sub-1.0 programs exist for rentals that fall slightly short.
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