How to Refinance into a DSCR Loan After a Fix-and-Flip

Many real estate investors execute a fix-and-flip with one goal in mind: renovate, resell, and move on. But for savvy investors following the BRRRR method (Buy, Rehab, Rent, Refinance, Repeat), there’s a better way to grow long-term wealth: refinance into a DSCR loan.

Debt Service Coverage Ratio (DSCR) loans allow you to pivot from short-term, high-cost financing into long-term, income-based lending—with no need to document your personal income.

Let’s break down exactly how to refinance into a DSCR loan after a flip, when it makes sense, and how to position your deal to get approved fast.

What Is a DSCR Loan?

A DSCR loan is an investment mortgage based on a property’s cash flow—not your personal income. Lenders use the Debt Service Coverage Ratio, or:

DSCR = Net Operating Income / Annual Mortgage Payments

If the rental income covers the mortgage, you’re likely to qualify. Learn more in our DSCR Loans 101 Guide.

Why Refinance Into a DSCR Loan After a Flip?

1. Recover Capital for Your Next Deal

Refinancing into a DSCR loan lets you pull cash out of your completed project, freeing up capital to fund your next acquisition. This is a core move in the BRRRR strategy.

2. Avoid Conventional Lending Limits

Unlike bank loans, DSCR lenders don’t cap you at 10 properties or ask for tax returns. That means no DTI checks, no W-2s, and no job verification—just property cash flow.

3. Turn Short-Term Risk into Long-Term Passive Income

Flips are risky. Refinancing into a DSCR loan and renting the property creates stable, ongoing income with much less stress.

When to Refinance into a DSCR Loan

Timing matters. Here are the key things to know:

• Seasoning Period: Some DSCR lenders require 3–6 months ownership before allowing a refinance. However, many offer exceptions—especially if you used cash or a bridge loan.
  
• Property Must Be Rent-Ready: DSCR lenders require the home to be fully renovated and able to rent immediately.
  
• Appraisal + Rent Survey Required: These determine the property’s value and rental income, which drive your DSCR.
  

Pro Tip: Choose a lender that allows projected rent (via Form 1007) if the unit is still vacant. Some also accept AirDNA data for short-term rental underwriting.

Step-by-Step: How to Refinance a Flip with a DSCR Loan

Step 1: Finish the Rehab and Stabilize

Make sure the property is in great condition and marketable as a rental.

Step 2: Get a Rent Estimate or Lease in Place

Some lenders accept signed leases. Others use projected market rent. The higher your rent, the better your DSCR ratio.

Step 3: Choose the Right DSCR Lender

Look for lenders who:

• Allow cash-out refinance immediately or after 3 months
  
• Offer interest-only options for higher cash flow
  
• Allow vacant properties with strong rent comps
  

Start here: Refinancing with DSCR Loans

Step 4: Apply and Close

You’ll need:

• Credit score (minimum 640)
  
• Appraisal with rent schedule
  
• Proof of down payment and reserves (usually 6 months PITIA)
  
• LLC documents if vesting in an entity
  

Skip the W-2s, tax returns, and DTI calculations.

Who This Strategy Works Best For

• BRRRR Investors looking to recycle capital
  
• Fix-and-Flip Investors pivoting to long-term rental holds
  
• Self-Employed Borrowers without conventional income documentation
  
• LLC Investors who want to borrow in an entity name
  

If you’re unsure whether you qualify, get pre-qualified in minutes with a DSCR specialist.

DSCR Refinance Scenario Example

Investor Profile: Melanie buys a distressed home for $180,000, spends $40,000 on rehab, and rents it for $2,100/month.

• All-in cost: $220,000
  
• Appraised value: $300,000
  
• DSCR Loan: 75% LTV = $225,000 loan amount
  
• Monthly PITIA: ~$1,500
  
• DSCR: $2,100 / $1,500 = 1.4
  

She pulls out her capital, rents the property, and repeats the process.

Pros and Cons of Refinancing into a DSCR Loan

Pros:

• No personal income verification
  
• Can refinance quickly (as little as 3 months)
  
• Works for LLC borrowers
  
• Scalable for portfolio growth
  

Cons:

• Higher interest rates vs. conventional loans
  
• Prepayment penalties (usually 3–5 years)
  
• Minimum DSCR and credit score requirements
  

FAQs: DSCR Refinance After a Fix-and-Flip

Ready to Refinance Your Flip?

Turn your flip into a rental and keep scaling.
Submit your scenario to get matched with a DSCR lender
Unlock your equity. Fund your next deal. Build your portfolio.

Read Next

• The BRRRR-Friendly Guide to DSCR Loan Refinancing
  
• DSCR Loans for Short-Term Rental Properties
  
• How to Use a HELOC to Buy Your Next Rental Property
  
• Comparing DSCR Loans to Traditional Mortgages
  

Don’t leave your equity locked up.
DSCR loans are one of the most powerful tools for turning flips into lasting cash flow.

Get Started Today