The property does the qualifying
A DSCR loan compares the property's rent to its full monthly payment, including taxes and insurance. If the rent covers it comfortably, your personal income and W-2 matter far less. Try the numbers on our DSCR calculator.
A flip loan looks at purchase price, rehab budget and after-repair value, then sets a limit against both. Rehab money is usually released in draws after inspections, so you front each phase of work before it is reimbursed. Run a deal through the fix and flip calculator before you make an offer.
Ground-up construction works the same way, funded in draws as the build progresses. Bridge loans trade a higher cost for speed when a seller wants a quick close or a property needs repositioning before it qualifies for long-term debt.
Which investor loan for which move
| If you need to… | Look at | Why it fits |
|---|---|---|
| A long-term rental you plan to hold | DSCR Rental Loan | Qualifies on the rent, not your tax returns. |
| Buying and renovating to resell | Fix & Flip Loan | Purchase and rehab money sized to after-repair value. |
| Closing fast or repositioning a vacant property | Real Estate Bridge Loan | Short-term money that moves quickly, refinanced once the property is stabilized. |
| Pulling equity out of a rental you own | Cash-Out Refinance | Turns equity into the down payment on your next deal. |
What lenders look at, and where investors stumble
- Borrow in an entity. Most investor loans are made to an LLC, with the owners also signing personally. Have your formation papers and operating agreement ready.
- Reserves. Lenders want cash left over after closing to cover several months of payments. Spending every dollar on the down payment can sink an otherwise good deal.
- Seasoning. Many lenders want you to have owned a property for a while before a cash-out based on its new value. Plan your refinance timing early.
- Using business loans for property. Many working-capital programs exclude real estate investing outright. Use loans built for property instead.
- Growing past one-off loans. Once you hold several rentals, a rental portfolio loan can roll them into one.
Real Estate Investors: common questions
My tax returns show little income after depreciation. Can I still buy rentals?
Often, yes. DSCR loans qualify on the property's rent rather than your returns, which is why investors with heavy write-offs use them.
Can I refinance out of a fix and flip loan and keep the house as a rental?
Yes, that is a common path. Once the rehab is done and a tenant is in place, a DSCR or cash-out refinance can replace the short-term loan, subject to seasoning.
Do I need an LLC before I apply?
Not always to start, but most investor lenders close in an entity's name. Forming one early avoids delays at the closing table.
Last updated . General guidance, not a commitment to lend; every lender in our network reviews each deal on its own.
