Pennsylvania investors refinance a lot of row homes, twins and small multifamily bought with hard money in Philadelphia, Pittsburgh and the smaller cities. A DSCR rate-and-term refinance swaps that short-term loan for long-term financing based on the rent.
In short: Yes, LendingStreet offers DSCR rate-and-term refinances on 1-8 unit investment property in Pennsylvania, 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.
Pennsylvania's rental stock is old: brick row homes and twins in Philadelphia, Allentown, Reading and Harrisburg, frame houses and small multifamily in Pittsburgh, Erie and Scranton. Most need roofs, mechanicals and updates, which is why so many deals start with hard money.
Philadelphia requires a rental license, and many rentals built before 1978 need lead-safe or lead-free certification when children under six live there. Pittsburgh and other cities have their own rental registration programs. Have these in order before you apply.
Pennsylvania's realty transfer tax, with local add-ons that are especially high in Philadelphia, applies to deeds on a sale. A refinance where the owner stays the same usually does not trigger it. Expect lender's title insurance, county recording fees and settlement charges.
Pennsylvania title insurance rates are filed through a statewide rating bureau, and a reissue or refinance rate may apply if the prior title policy is recent. Ask your title agent whether you qualify.
Your term sheet will show lender costs separately from title and government charges. Confirm the final figures with your title company or closing attorney.
Pennsylvania property taxes include county, municipal and school district taxes, and school taxes are often the largest piece. Some counties have not reassessed in many years, so bills can be uneven. Use the current bills. Older brick and frame buildings can draw higher insurance quotes.
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 Pittsburgh-area two-family using a hard money loan that now has a payoff of $224,000 interest-only, or about $2,240 a month in interest. The property now appraises at $320,000 and rents for $2,600 a month, with taxes and insurance of about $650 a month.
A rate-and-term loan of $232,000 covers the payoff plus $8,000 of closing costs, which is about 72.5% LTV, inside the 80% limit some programs allow. On 30-year amortization, principal and interest is about $1,544, so the total payment is about $2,194 and the DSCR is about 1.19x, 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 | $320,000 |
| Hard money payoff | $224,000 |
| Closing costs financed | $8,000 |
| New loan amount | $232,000 |
| Loan-to-value | About 72.5% |
| Principal and interest | About $1,544 |
| Taxes and insurance | $650 |
| Total monthly payment | About $2,194 |
| Monthly rent | $2,600 |
| DSCR | About 1.19x |
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.
Philadelphia is the state's largest rental market, with row homes across many neighborhoods. Pittsburgh offers lower prices and strong rent relative to value. Allentown, Reading, Lancaster and Harrisburg draw investors looking for small multifamily.
Erie, Scranton and Wilkes-Barre have lower prices, which can make the ratio easier to clear but keep loan sizes small. Check the $150,000 minimum early.
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 Pennsylvania, starting at $150,000.
Yes. LLC borrowers are standard. We will ask for the operating agreement, formation documents and good standing for the entity.
Yes. Residential DSCR programs cover 1-8 units. Maximum LTV may be lower on 5-8 units and varies by program.
Usually not, since it is tied to deeds on a sale. A refinance where the owner stays the same generally avoids it. Confirm with your title agent.
A Philadelphia rental needs a rental license, and many older rentals need lead certification. Having both in place keeps the property compliant and avoids underwriting questions.
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.
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