In New York, the refinance math has an extra line most states do not: the mortgage recording tax. A DSCR rate-and-term refinance can replace a hard money or higher-rate loan with long-term financing based on rent, and structuring it well can reduce that tax.
In short: Yes, LendingStreet offers DSCR rate-and-term refinances on 1-8 unit investment property in New York, 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.
New York's small-investor stock ranges from two- to four-family houses in Queens, Brooklyn, the Bronx and Staten Island to older two-family homes and small apartment buildings in Buffalo, Rochester, Syracuse and Albany. Upstate, investors often buy older houses with short-term money and refinance after repairs.
In New York City, rent stabilization can apply to many older buildings with six or more units, which limits rent increases and can affect what the appraiser and underwriter will count. Know the regulatory status of each unit before you apply.
New York charges a mortgage recording tax on recorded mortgages, and the rate is higher in New York City and some downstate counties. On a refinance, a consolidation, extension and modification agreement (CEMA) can let the existing mortgage be assigned to the new lender so the tax applies mainly to new money. Whether a CEMA is possible depends on the current lender and the program.
Expect lender's title insurance, recording fees and attorney fees, since New York closings typically involve attorneys. Ask your attorney or title company for a mortgage tax estimate both with and without a CEMA.
Your term sheet will show lender costs separately from title and government charges. Confirm the final figures with your title company or closing attorney.
Property taxes in many parts of New York are high, especially upstate where rates per dollar of value can be steep, and in Long Island and Westchester. In New York City, taxes on one- to three-family homes are often lower relative to value, but water and sewer charges and insurance still matter. Coastal flood zones require flood coverage.
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 Buffalo two-family using a hard money loan that now has a payoff of $208,000 interest-only, or about $2,080 a month in interest. The property now appraises at $300,000 and rents for $2,400 a month, with taxes and insurance of about $700 a month.
A rate-and-term loan of $217,000 covers the payoff plus $9,000 of closing costs, which is about 72.3% LTV, inside the 80% limit some programs allow. On 30-year amortization, principal and interest is about $1,466, so the total payment is about $2,166 and the DSCR is about 1.11x, 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 | $300,000 |
| Hard money payoff | $208,000 |
| Closing costs financed | $9,000 |
| New loan amount | $217,000 |
| Loan-to-value | About 72.3% |
| Principal and interest | About $1,466 |
| Taxes and insurance | $700 |
| Total monthly payment | About $2,166 |
| Monthly rent | $2,400 |
| DSCR | About 1.11x |
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.
Upstate cities such as Buffalo, Rochester, Syracuse and Albany draw investors with lower prices and steady rent relative to value, which can make the ratio easier to clear. Downstate, small multi-family in the outer boroughs and nearby suburbs carries higher prices and tighter ratios.
New York City's Local Law 18 sharply restricts short-term rentals, and many other New York towns regulate them too. Plan on qualifying with long-term rent unless the property's STR status is clear.
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 New York, starting at $150,000.
Yes. Residential DSCR programs cover 1-8 units. Maximum LTV may be lower on 5-8 units and varies by program.
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.
Often, through a CEMA, where the existing mortgage is assigned so the tax applies mainly to new money. It depends on the current lender's cooperation and the program.
It can. Stabilized units are underwritten at their legal regulated rent, and buildings with six or more units in New York City need careful review of each unit's status.
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.
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.
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