Waco's rental market is built on Baylor, healthcare and a steady stream of visitors, and investors renovate older homes there with short-term money. The rate-and-term refinance is usually decided by the Texas tax bill.
In short: Yes. LendingStreet refinances 1-8 unit rentals in the Waco area with DSCR rate-and-term loans that pay off hard money, a bridge loan or an existing mortgage, up to 80% LTV on some programs. The loan qualifies on the property's rent, not your tax returns, with a 620 minimum credit score, LLC borrowers and 30-year terms available.
Waco has older homes in Castle Heights, Sanger Heights and Brook Oaks, student rentals near Baylor University, post-war homes across north and east Waco, and newer stock in Woodway, Hewitt, Robinson, China Spring and Lorena.
Baylor, healthcare, manufacturing and tourism drive rental demand. Investors buy dated homes with hard money, renovate and refinance once a lease is signed.
Each part of the Waco area brings a different refinance profile.
| Area | Typical rental stock | Refinance angle |
|---|---|---|
| Castle Heights, Sanger Heights | Older single-family | Renovate and refinance; professional tenants |
| Near Baylor University | Older homes and small multi-unit | Student leases; confirm occupancy rules |
| North and east Waco | Post-war single-family | Lower prices; taxes are a large share of payment |
| Woodway, Hewitt, Robinson | Newer suburban homes | Replace bridge or adjustable loans |
A rate-and-term refinance replaces the loan you have with a new one, without taking equity out as cash beyond small amounts allowed by the program. The new balance covers the payoff of the existing loan plus closing costs. The goal is a lower payment, a fixed rate in place of an adjustable one, or a 30-year term in place of a short-term interest-only loan.
Because it pulls no equity out, rate-and-term can go up to 80% LTV on some programs, higher than the 75% cash-out limit. Qualification runs on the debt service coverage ratio: monthly rent divided by the full payment, including principal, interest, taxes, insurance and any HOA dues.
Rentals do not get the Texas homestead exemption, so the tax bill is based on full appraised value across county, city, school district and other units. Use the McLennan Central Appraisal District record and the full combined rate.
Texas sets title insurance premiums by state rule, so that cost is predictable. Hail and wind are part of insurance pricing in Central Texas; get a quote with the deductible.
Leases near Baylor often follow the academic year. For a refinance, a signed long-term lease and supported market rent are what matter, and occupancy must follow city zoning.
Waco regulates short-term rentals with permits, and rules differ by zoning. Most Waco refinances are underwritten on long-term leases.
Tourism has brought visitors and new businesses downtown and along the Brazos, but long-term rental demand is what most refinances rely on. Budget taxes on the full McLennan County rate, and include any hail and wind deductible in your planning even though only the premium goes into the DSCR payment.
This example is illustrative and not a quote. An investor owns a Castle Heights home renovated with a hard money loan. It appraises at $245,000, the payoff on the existing loan is $175,000, and estimated closing costs of $6,000 are rolled into the new loan, for a balance of $181,000, about 73.9% LTV. Rent is $1,900 a month.
Estimated principal and interest on a 30-year loan comes to about $1,235. Adding taxes of $430 and insurance of $170 gives a total payment of about $1,835, for a DSCR of about 1.04x, above the 1.0x standard minimum. Compared with the old loan, the monthly payment drops by about $370, and the balance now amortizes.
Two quick stress tests are worth running on any Waco refinance. If the appraiser's market rent came in at $1,835 instead of $1,900, the ratio would sit right at 1.0x. And holding everything else the same, this rent supports a balance of roughly $191,000 at 1.0x, which shows how much room the file has.
| Item | Hard money loan (interest-only) | New DSCR loan |
|---|---|---|
| Appraised value | $245,000 | $245,000 |
| Loan balance | $175,000 | $181,000 |
| LTV | 71.4% | 73.9% |
| Principal and interest (or interest-only) | $1,605 | $1,235 |
| Taxes, insurance and HOA | $600 | $600 |
| Total monthly payment | $2,205 | $1,835 |
| DSCR at $1,900 rent | About 0.86x | About 1.04x |
Seasoning varies by program. Some programs will use the new appraised value soon after a renovation; others cap the loan at the purchase price plus documented improvements for the first several months. Keep receipts, permits and before-and-after photos.
Start the refinance well before a hard money or bridge loan matures. Extension fees are expensive, and appraisal, title and underwriting take time. A signed lease, or a market rent estimate from the appraiser, is what the DSCR is built on.
If the property is still being leased up, some programs can use the appraiser's market rent estimate instead of a signed lease, but terms may differ. A signed lease at or above market rent is the cleanest path.
A complete file keeps the appraisal and underwriting on schedule.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, current payoff, rent and what you want to improve, whether that is payment, term or getting off a maturity date. We run the DSCR at a few balances and come back with options, including sub-1.0 programs where they fit.
If you own five or more rentals, a blanket portfolio loan can refinance them together under one loan with one payment, qualified on the portfolio's combined cash flow.
For statewide details, see our Texas rate-and-term refinance page. Use the form below or call (877) 298-1001.
Usually taxes. Without a homestead exemption, the bill is based on full appraised value.
Yes, with signed long-term leases and rent supported by the appraiser, and occupancy that follows city rules.
Yes. We refinance 1-8 unit rentals across McLennan County when rent and value support the loan.
Up to 80% LTV on some programs, enough to pay off the existing loan and closing costs. The rent also has to cover the new payment at the program minimum.
No. The loan qualifies on the property's rent. You need a 620 or higher credit score, reserves and entity documents if the property is in an LLC.
You can lower the balance, or look at sub-1.0 DSCR programs, which accept rent slightly below the payment on some files.
Yes. LLC borrowers are standard on DSCR loans, and you sign for the loan personally where the program requires it.
It depends on the goal. Rate-and-term allows higher leverage on some programs and focuses on terms; cash-out lets you take equity out up to 75% LTV.
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