Providence and Pawtucket investors often buy triple-deckers and two-families with hard money and renovate them. A DSCR rate-and-term refinance replaces that short-term loan with long-term financing based on the rent.
In short: Yes, LendingStreet offers DSCR rate-and-term refinances on 1-8 unit investment property in Rhode Island, 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.
With a rate-and-term refinance, the new loan pays off the old one and covers closing costs, and that is about it. You are not pulling equity out, so programs allow higher leverage: up to 80% LTV on some programs, versus up to 75% for cash-out. Any cash you receive at closing is capped at a small amount that varies by program.
Qualification runs on the property, not your income. The debt service coverage ratio compares monthly rent with the new payment, including taxes, insurance and HOA dues, and standard programs want at least 1.0x. You need a 620 or higher credit score, but no tax returns or W-2s, and the loan can close in your LLC on a 30-year term.
| 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) |
Hard money and bridge loans are interest-only and short, and the clock keeps running after the work is done. The usual exit is a refinance into a DSCR loan once the property is leased, which turns a maturity date into a 30-year payment.
Rhode Island's rental stock is old and dense: triple-deckers and two-family houses in Providence, Pawtucket, Central Falls and Woonsocket, with single-family and small multifamily in Cranston, Warwick and East Providence. Most were built before 1940.
Rhode Island requires lead compliance for many pre-1978 rentals, typically shown by a lead certificate. Have it ready, since underwriting may ask for it on older multi-family.
Rhode Island's realty conveyance tax applies to deeds on a sale, so a refinance where the owner stays the same usually avoids it. Expect lender's title insurance, recording fees at the city or town and attorney or settlement fees.
Recording in Rhode Island happens at the city or town level, not the county. Your closing attorney or title company will handle the payoff, discharge and recording.
Get a written closing estimate early, since these items can usually be financed into the new loan as long as the total stays within the program's LTV.
Rhode Island property taxes are high, and some cities, including Providence, tax non-owner-occupied residential property at a higher rate than owner-occupied homes. Use the investor tax bill, not a homestead rate, when you estimate the payment. Coastal flood zones require flood insurance.
Lenders escrow these costs and count them in the payment, so an outdated tax bill or a stale insurance quote can make the ratio look better than it will be. Use current figures from the start.
This example is illustrative and not a quote. An investor bought and renovated a Providence triple-decker using a hard money loan that now has a payoff of $380,000 interest-only, or about $3,800 a month in interest. The property now appraises at $540,000 and rents for $4,500 a month, with taxes and insurance of about $1,250 a month.
A rate-and-term loan of $390,000 covers the payoff plus $10,000 of closing costs, which is about 72.2% LTV, inside the 80% limit some programs allow. On 30-year amortization, principal and interest is about $2,634, so the total payment is about $3,884 and the DSCR is about 1.16x, 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 | $540,000 |
| Hard money payoff | $380,000 |
| Closing costs financed | $10,000 |
| New loan amount | $390,000 |
| Loan-to-value | About 72.2% |
| Principal and interest | About $2,634 |
| Taxes and insurance | $1,250 |
| Total monthly payment | About $3,884 |
| Monthly rent | $4,500 |
| DSCR | About 1.16x |
How soon you can refinance depends on the program. Some use the new appraised value right away, while others look at purchase price plus documented rehab costs until you have owned the property for a set period. Rate-and-term loans tend to be more flexible here than cash-out.
Rent is usually taken from the signed lease and checked against the appraiser's market rent estimate. A lease well above market may be cut back to the estimate, so price the lease realistically.
Providence is the state's main rental market, with demand from Brown, RISD, Providence College and the hospitals. Pawtucket, Central Falls and Woonsocket offer lower prices on similar triple-decker stock.
Newport and the beach towns have vacation rental demand, and many towns require short-term rental registration. Confirm local rules before relying on nightly income.
Having these ready before you apply keeps the appraisal and underwriting moving.
Rate-and-term is the right tool when the goal is a lower, longer payment. If you want equity out, a cash-out refinance up to 75% LTV is the better fit. If a unit is still vacant, it often pays to finish leasing before you apply. On 5-8 unit buildings, maximum LTV can be lower and 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 Rhode Island, 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.
Providence taxes non-owner-occupied residential property at a higher rate. If the prior owner lived there, their bill may have been lower. Use the investor rate.
Many pre-1978 rentals need lead compliance. Having the certificate in place avoids underwriting questions on older multi-family.
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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