Texas investors in Dallas-Fort Worth, Houston, San Antonio and Austin often buy with hard money and refinance once the rental is leased. A DSCR rate-and-term refinance replaces that loan with long-term financing based on rent.
In short: Yes, LendingStreet offers DSCR rate-and-term refinances on 1-8 unit investment property in Texas, 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.
The idea is simple: trade the current loan for a better one. The new balance covers the payoff and closing costs, can reach up to 80% LTV on some programs (cash-out tops out), and any cash back is held to a small allowance set by the program.
Underwriting centers on the DSCR: rent divided by principal, interest, taxes, insurance and HOA dues. The standard minimum is 1.0x, with sub-1.0 programs for rentals just under that line. Minimum credit is 620, LLCs are standard, terms run up to 30 years, and you do not need W-2s or tax returns.
| 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) |
A bridge or hard money loan gets the property bought and fixed, but it is not meant to be held. The standard exit is to refinance into a DSCR loan once the unit is rented, rather than paying higher short-term interest or asking for an extension.
Texas rental stock is mostly single-family: newer suburban construction across DFW, Houston and San Antonio, older brick ranch homes in established neighborhoods, and small multifamily in Austin and inner-city areas. Many investors buy older houses with short-term money and refinance after updates.
Texas's home equity rules for cash-out refinances apply to homesteads. A rate-and-term refinance on non-owner-occupied investment property is underwritten as a business-purpose loan.
Texas does not have a state transfer tax or mortgage tax. Title insurance rates are set by the state, and a refinance credit may apply if the prior policy is recent. Expect lender's title insurance, county recording fees and settlement charges.
Your title company will handle the payoff, the release of the old lien and recording of the new deed of trust. Ask whether the refinance credit on the title policy applies, and confirm whether any HOA transfer or status fees will show up on the settlement statement.
Because closing costs are usually rolled into the balance, they affect both the LTV and the ratio, so ask title for real numbers before you lock.
Texas has no state income tax, and property taxes are high, often the largest line after principal and interest. Investors do not get homestead exemptions. Use the current bill and consider protesting the appraised value. Hail and wind drive insurance costs, and Gulf Coast properties may need windstorm coverage. Because the tax line is so large, the same rent that clears 1.0x easily in a low-tax state can come up short in Texas, so run the ratio with the real bill before you order the appraisal.
When a file is close to the line, the fix is usually on the expense side: shop the insurance, confirm the actual tax bill and check whether any special assessments are scheduled.
This example is illustrative and not a quote. An investor bought and renovated a Fort Worth single-family rental using a hard money loan that now has a payoff of $252,000 interest-only, or about $2,415 a month in interest. The property now appraises at $360,000 and rents for $2,700 a month, with taxes and insurance of about $820 a month.
A rate-and-term loan of $260,000 covers the payoff plus $8,000 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 $1,752, so the total payment is about $2,572 and the DSCR is about 1.05x, 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 | $360,000 |
| Hard money payoff | $252,000 |
| Closing costs financed | $8,000 |
| New loan amount | $260,000 |
| Loan-to-value | About 72.2% |
| Principal and interest | About $1,752 |
| Taxes and insurance | $820 |
| Total monthly payment | About $2,572 |
| Monthly rent | $2,700 |
| DSCR | About 1.05x |
Programs differ on seasoning. If you closed on the property recently, some will use the after-rehab appraisal and others will base the loan on what you paid plus documented improvements. Because rate-and-term only needs to cover the payoff, the lower figure is often still enough.
Expect the appraisal to include a market rent estimate alongside the value. Underwriting compares it with your lease, and the figure it uses depends on the program.
Dallas-Fort Worth and Houston are the largest rental markets, with deep pools of suburban single-family. San Antonio has steady demand from military bases and healthcare. Austin has higher prices and tighter ratios.
Texas STR rules vary by city. Austin, San Antonio and some coastal towns regulate them. Confirm before relying on nightly income. Outside the big metros, El Paso, Killeen near Fort Hood and the Rio Grande Valley offer lower prices and steady rental demand, though loan sizes there can run closer to the $150,000 minimum.
Having these ready before you apply keeps the appraisal and underwriting moving.
Choose rate-and-term when you mainly want out of short-term debt or into a lower payment. Choose cash-out, up to 75% LTV, when you want to pull equity. If the ratio is short, a sub-1.0 program or finishing the lease-up may solve it. Leverage on 5-8 unit properties and larger balances 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 Texas, starting at $150,000.
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.
No. The loan qualifies on the property's rent. You need a 620 or higher credit score, reserves and entity documents if you use an LLC.
Texas's cash-out home equity rules apply to homesteads. A rate-and-term refinance on non-owner-occupied rental property is a business-purpose loan.
It can help. A lower appraised value lowers the tax bill and raises the ratio. Use the current bill in your estimate.
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.
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