What Is a DSCR Rate-and-Term Refinance?
A DSCR rate-and-term refinance replaces an existing loan on an investment property without primarily taking cash out. Investors commonly use it to exit hard money or bridge debt, replace an adjustable-rate loan, or move into longer-term rental financing. DSCR income qualification is based on the property rather than the borrower's W-2s, pay stubs, or personal tax returns.
The seasoning question is really a value-basis question:
Program 3 can use a new ARV immediately after completed renovation. Program 1 can use a new/current ARV after at least 91 days. Before 91 days, financing can still be possible, but leverage is based on the original purchase/value basis instead of the new ARV.
Program 3: New ARV Immediately After Completed Renovation
Program 3 is the true completed-renovation no-seasoning path. Once the renovation is complete, the program can use the new ARV immediately. Program 3 requires at least 660 FICO, a $75,000 minimum loan, and a $100,000 minimum property value. It does not require an executed lease.
Program 1: New ARV After 91 Days
Program 1 can use a new/current ARV after the borrower has owned the property for at least 91 days. New-ARV leverage is generally capped at 75% LTV, and purchase price plus documented renovation budget must support the requested loan amount. Program 1 also requires a lease.
If the property has been owned for less than 91 days and Program 3 does not fit, a rate-and-term refinance can still be possible using the original purchase/value basis rather than the new ARV.
Core Qualification Factors
Credit profile. The available capital partner and maximum leverage depend on the full credit profile. Lower-credit Program 7 exists for qualifying purchases and cash-out refinances, but should not automatically be treated as a rate-and-term rule.
DSCR. A qualifying option can go down to 0.75 DSCR. That flexibility generally adds about 1.00% to 1.25% to the standard rate.
Loan-to-value. Maximum LTV depends on the capital partner, credit, value basis, property type, loan size, and DSCR.
Lease status. Lease rules are program-specific. Program 1 requires a lease. Programs 2 and 3 do not require a lease.
Appraisal. The appraisal must support the value and the rent methodology used by the selected capital partner.
What Documents Are Usually Needed?
- Current mortgage or hard-money payoff information
- Property insurance
- Lease documentation when required by the selected program
- Entity documents when closing in an LLC or other eligible entity
- Property appraisal and applicable rent support
- Most recent two months of bank statements to verify closing liquidity
- Eligible asset statements when needed to document reserves
- Credit authorization after terms are accepted and processing is authorized
W-2s, pay stubs, personal tax returns, and employment verification are not used to calculate DSCR income qualification. That is different from saying no bank or asset statements are required.
Check Your Rate-and-Term Scenario
Send the payoff, ownership date, value, rent, FICO range, and whether renovation was completed.
Get a Quote →When Rate-and-Term Is Better Than Cash-Out
A rate-and-term refinance can be the cleaner choice when your priority is replacing expensive short-term debt rather than maximizing proceeds. Borrowing less can improve DSCR and reduce LTV. If you also need equity out, compare the structure with a DSCR cash-out refinance before deciding.