Three ways to finance a rental
Acquisition, restructure, or equity extraction. All three qualify the same way — on the property's coverage ratio — but they differ in seasoning rules, LTV ceilings, and how the appraisal is treated.
Purchase
Financing to acquire a rental property. The advantage over conventional investor financing isn't usually the rate — it's that the number of mortgages already in your name doesn't enter the calculation.
Investors who've hit the agency financed-property limit, or whose returns show heavy depreciation and paper losses, tend to find this is the only door that stays open as the portfolio grows.
Fits well when
- You've exhausted conventional financed-property slots
- Your tax returns understate your real cash flow
- You're buying in an LLC and want to keep it that way
- You need certainty of close more than the last eighth of a point
Typical parameters
| Max LTV | [XX]% |
| Min DSCR | [X.XX] |
| Loan amounts | [$XXX,XXX – $X,XXX,XXX] |
| Terms | 30-year fixed, 40-year, interest-only options |
| Vesting | LLC, corporation, or individual |
| Occupancy | Non-owner-occupied only |
| Reserves | [X] months PITIA |
Parameters vary by lender, property type, and credit tier. Illustrative only — not an offer of credit.
Rate & term refinance
Replacing existing debt on a property you already own, without taking cash out. The classic use is exiting short-term money: a hard-money purchase loan, a bridge facility, or a balloon coming due.
Because no proceeds come back to you, LTV limits are typically more generous here than on cash-out, and seasoning requirements are often lighter.
Fits well when
- A bridge or hard-money loan is approaching maturity
- You bought with expensive short-term debt to win a competitive deal
- You want to move from adjustable to fixed
- You're consolidating a seller-financed note into institutional debt
On the BRRRR timeline: if you've just finished a rehab, the gap between what you paid and what it's now worth is exactly what seasoning rules govern. Ask before the work is done, not after — the answer determines whether you refinance in three months or twelve.
Typical parameters
| Max LTV | [XX]% |
| Min DSCR | [X.XX] |
| Seasoning | [X] months from acquisition |
| Terms | 30-year fixed, 40-year, interest-only options |
| Cash back | Limited to incidental amounts |
| Prepay | [X]-year declining, or buyout available |
Parameters vary by lender and credit tier. Illustrative only — not an offer of credit.
Cash-out refinance
Pulling equity out of a property you own as tax-free loan proceeds, to use as down payment on the next acquisition, to fund a rehab, or to pay off higher-cost debt.
This is the compounding mechanism most of our clients run: appreciation and principal paydown in the existing portfolio become the equity for the next purchase, without selling and without a taxable event.
Fits well when
- A property has appreciated meaningfully since you bought it
- You finished a value-add rehab and want the new basis recognized
- You own free-and-clear property sitting idle as dead equity
- You're consolidating expensive short-term debt into a fixed structure
Cash-out raises your loan amount, which raises PITIA, which lowers your DSCR. The equity you can access is usually capped by coverage before it's capped by LTV. Run the calculator at your target loan amount to see where the ratio lands.
Typical parameters
| Max LTV | [XX]% |
| Min DSCR | [X.XX] |
| Seasoning | [X] months; [X] for post-rehab value |
| Max cash to borrower | [$X,XXX,XXX] |
| Use of proceeds | Business purpose |
| Prepay | [X]-year declining, or buyout available |
Parameters vary by lender and credit tier. Illustrative only — not an offer of credit.
Property types we finance
All three programs above apply across the residential range. What changes is the lender set and how the appraisal gets done.
| Property type | Appraisal | Income basis | What to watch |
|---|---|---|---|
| Single-family Detached, townhome, warrantable condo |
Standard residential with rent schedule | Lease, or appraiser's market rent | Condo warrantability and HOA dues hitting PITIA |
| 2–4 units Duplex, triplex, fourplex |
Residential multi-unit with operating income statement | Total rent roll across units | Partial vacancy treatment varies by lender |
| 5–8 units Small multifamily |
Often a commercial-style narrative appraisal | Rent roll, sometimes net of expense factor | Smaller lender set, longer timeline, higher appraisal cost |
Rural properties, unique construction, heavy deferred maintenance, and non-warrantable condos are all financeable but narrow the lender list. Tell us early rather than at appraisal.
The trade-offs worth thinking about
Points versus rate
Paying points buys down the rate, which lowers the payment, which raises your DSCR. Sometimes buying down isn't about the monthly savings at all — it's what gets a marginal file over the qualifying threshold. The breakeven depends on your hold period.
Interest-only versus amortizing
Interest-only maximizes cash flow and coverage during the IO period, at the cost of building no equity through paydown. It fits a defined plan — a hold-then-sell window, or a bridge to a stabilized refinance — better than it fits an indefinite hold.
Prepayment penalty term
Accepting a longer prepay period generally improves your rate. If you intend to hold long term, that's cheap. If there's any real chance you sell or refinance inside the window, price the buyout before you commit — it's often larger than people expect.
Maximum LTV versus best pricing
Borrowing the maximum available is rarely the same as borrowing the smartest amount. Dropping one LTV tier often improves the rate enough to offset a meaningful part of the extra cash you'd have to bring. We'll model both.
Not sure which program fits?
Describe the property and what you're trying to accomplish. We'll tell you which structure gets you there and what it costs.