The rehab is done and the tenant is signed. Now the short-term loan needs to go before its high payment and maturity date start costing you.
In short: To refinance hard money into a DSCR loan, the property generally needs to be finished, rented or rent-ready, and appraised at a value that covers your payoff. DSCR programs lend up to 75% of value on a cash-out refinance, qualified on rent rather than personal income. Seasoning rules decide whether the new appraised value or your cost basis is used, so timing matters.
Hard money and bridge loans are built for speed and renovation. They are short-term, often interest-only and come due in months, not decades.
A DSCR loan replaces that with long-term debt, including 30-year fixed options. Your payment becomes predictable, and the property can hold for years while the rent covers it.
DSCR underwriting expects a finished rental. Check these boxes before you apply.
Most programs want you to own the property for a period before lending on the new, higher value. That period varies, commonly about 3–12 months.
If you refinance before seasoning is met, some programs cap the loan using your purchase price plus documented rehab. That can produce a much smaller loan, as the example below shows.
This example is illustrative and uses a sample 7.0% rate, not a quote. An investor bought a house for $200,000 and spent $60,000 on rehab. The hard money payoff is $240,000. The property appraises at $340,000 and rents for $2,600 a month.
With seasoning met, 75% of the appraised value gives a $255,000 loan. That covers the payoff, and the payment of about $2,097 including $400 of taxes and insurance gives a DSCR of about 1.24x.
| Seasoning met | Seasoning not met | |
|---|---|---|
| Value used | $340,000 appraised | $260,000 cost basis |
| Loan at 75% | $255,000 | $195,000 |
| Hard money payoff | $240,000 | $240,000 |
| Before closing costs | $15,000 surplus | $45,000 shortfall |
Plan the refinance when you buy, not when the hard money loan is about to mature. Know the seasoning rule you will be refinancing under and pick a hard money term long enough to reach it.
If you cannot wait, have cash ready to cover any gap, or ask about an extension on the short-term loan. A rate-and-term refinance that just covers the payoff can also be a good first step.
The two loans are partners in one plan. The short-term loan creates the value, and the DSCR loan lets you keep it.
| Feature | Hard money / bridge | DSCR loan |
|---|---|---|
| Typical term | Months | Up to 30 years |
| Payment | Often interest-only | Fixed options, amortizing |
| Qualification | Deal and experience | Rent versus payment |
| Best use | Buy and renovate | Hold and rent |
Send your payoff letter, rehab costs, lease and purchase date. Your loan officer will tell you whether seasoning is met and what value basis applies. Our financing team typically brings back 2–3 options so you can compare loan size and cash to close.
Many investors refinance as soon as the property is finished and rented. Whether the new appraised value is used depends on seasoning, which commonly runs about 3–12 months. Before that, some programs size the loan on cost basis.
Sometimes. Some programs accept a vacant, rent-ready property using the appraiser’s market rent estimate. Others require a signed lease, and pricing or leverage may differ.
Only if 75% of the value used is more than your payoff and closing costs. When seasoning is met and the rehab added real value, many investors pull some cash out. When it is not, the loan may only cover the payoff, or less.
It is the refinance step of BRRRR. You buy, rehab and rent with short-term financing, then refinance into long-term debt. Our BRRRR guide walks through the full cycle.
Yes. We finance fix and flip and bridge loans as well as DSCR rentals. Planning both loans with one financing team helps line up terms and seasoning from the start.
Ask your current lender about an extension, which often carries a fee. Another route is a rate-and-term refinance sized to the payoff, with cash to cover any gap. Plan this before maturity so you have time to choose.
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