A rate-and-term refinance is the quiet end of most Sioux Falls rehab projects: the work is done, the tenants are in, and a short-term loan needs to be replaced with something you can hold for decades.
In short: LendingStreet refinances 1-8 unit rentals in the Sioux Falls metro with DSCR rate-and-term loans that pay off hard money, bridge loans, balloons or an existing mortgage. Rate-and-term goes up to 80% LTV on some programs, qualifies on the property's rent with no W-2s or tax returns, and offers 30-year terms. The standard minimum DSCR is 1.0x and the minimum credit score is 620.
The most common case is an investor who bought a house in a central neighborhood with short-term money, rehabbed it, leased it and now needs to pay off the loan before it matures. Others are coming off a local bank loan with a balloon or a rate reset, or seller financing on a duplex.
Rate-and-term also helps when an existing rental loan has a payment that strains cash flow. A longer amortization or a better structure can lower the monthly payment and make the property easier to hold through vacancies and repairs.
A rate-and-term refinance pays off what you owe, plus closing costs, with little or no cash back. Because you are not taking equity out, some programs allow higher leverage than a cash-out, up to 80% LTV. If you want cash back, see our Sioux Falls cash-out page.
Some Sioux Falls investors start with a rate-and-term refinance and come back for a cash-out later, once seasoning rules allow and values have moved. Choosing rate-and-term now does not close that door.
| Feature | Rate-and-term | Cash-out |
|---|---|---|
| Purpose | Pay off existing debt | Pay off debt and take equity |
| Max LTV | Up to 80% on some programs | Up to 75% |
| Cash to borrower | Little or none | Yes |
| Qualifies on | Property rent | Property rent |
This example is illustrative and not a quote. An investor rehabbed a duplex near All Saints with a short-term loan that now has a $236,000 balance, costing about $2,065 a month in interest-only payments. The property appraises at $332,000 and both units are leased for a combined $2,350.
The new loan covers the payoff plus about $5,200 in closing costs, or $241,200, which is about 73% of the value. Estimated principal and interest is about $1,645. With taxes of $455 at the non-owner-occupied levy and insurance of $165, the payment is about $2,265 and the DSCR is about 1.04x. The investor now has a 30-year amortizing loan instead of a maturity date.
If the ratio comes in tighter than this, options include paying down the loan at closing, waiting until a rent increase takes effect, or looking at a program below 1.0x. We can show each option side by side.
| Item | Amount |
|---|---|
| Current short-term balance | $236,000 |
| Appraised value | $332,000 |
| New loan with closing costs | $241,200 |
| Loan-to-value | 73% |
| New monthly payment | $2,265 |
| DSCR | 1.04x |
Start the refinance well before your short-term loan matures. Appraisals in Sioux Falls usually come back quickly, but title work, lease verification and insurance can take time. Most investors start once units are leased and rents are being collected.
If your short-term loan has an extension option, know its cost and terms. Refinancing early is usually cheaper than paying for an extension, but having one in reserve can take pressure off if a tenant moves in later than planned.
Unpermitted work from the rehab can delay an appraisal or reduce value, so close out permits with the city before you apply. Leases that are not yet signed, or rents well above what similar units get, may be adjusted to market. And a tax bill that still shows the prior owner-occupied classification will change to the higher non-owner-occupied levy, so budget for it.
It also helps to know what the appraiser will use for rent. In Sioux Falls, comparable leases for duplexes and twin homes are usually easy to find, but unusual properties, like a single-family home with an accessory unit, may need more support. Bring your leases and any recent listings for similar units.
A complete file helps the refinance close on time.
If the house sits in Lincoln County on the south side of the city, the tax figure comes from that county's records rather than Minnehaha County's. Pull the right parcel record so the payment estimate is accurate, and check whether any special assessments for streets or utilities are still being paid off.
The best time to plan a rate-and-term refinance is before you buy the property with short-term money. Estimate the after-rehab value, the market rent and the full payment at the non-owner-occupied levy, then check whether the DSCR clears 1.0x at the loan amount you need to pay off your short-term debt.
If the numbers only work at a higher LTV than the program allows, you will need cash at closing to pay the difference. Knowing that early lets you adjust your offer, your rehab scope or your financing plan before you commit.
Many Sioux Falls investors follow this same path on each property: buy and rehab with short-term money, lease the units, then refinance into a long-term DSCR loan and repeat. Each round goes more smoothly when the next refinance is planned from day one.
Get a quote through the form below or call (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property. For statewide details, see our South Dakota rate-and-term page.
Yes. A DSCR rate-and-term refinance can pay off a hard money or fix and flip loan once the property is leased and the rent covers the payment.
Up to 80% on some rate-and-term programs. Larger balances and 5-8 unit buildings can have lower maximums.
Seasoning rules vary by program. Some programs use the appraised value soon after the rehab; others use cost basis for a period.
No. The loan qualifies on the property's rent compared with the full payment.
Yes. A DSCR loan with a 30-year term can replace a balloon or reset loan on a rental.
Programs below 1.0x exist for properties that fall a little short. Pricing and leverage adjust.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
Many close within a few weeks once the appraisal, title, leases and insurance are in. Start well before your current loan matures.
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