I along with a 4 friends formed an LLC to invest in rental properties. We have bought 2 properties and are looking at taking loans for buying our next property. However, we were told by a mortgage broker, that we cannot take a regular loan on the LLC, even if its against the properties. All the 5 members of the LLC would be liable for the full loan amount each. i.e. if the loan is 200K, then each member will have a loan of $200K on their names.
I was told that there are options for taking DSCR loans in the name of the LLC including taking HELOC or similar loans against the 2 properties. I wanted to check, is this possible, where none of the 5 members, have the loan reflected on them, and the loan is purely against the LLC. How does this work?
The ideas is to use the equity in the 2 current rental properties and get a loan against that. Any guidance will be appreciated.
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
7mo
@Prashant Kumar The loan officer is referring to the personal guarantee. Even when the property is titled to an LLC the lender will expect the members to personally guarantee the loan. Depending on how the operating agreement is drafted and the lender's internal policies one or only a few members may be required to personally guarantee the loan, instead of all 5 members of the LLC. I don't see a situation where you're avoiding a personal guarantee on a real estate loan.
Lender · Member since 2022 · 1k+ posts · 494 votes
7mo
There are DSCR loans that you can have in the LLC name but they will require a personal guarantor. Usually if the people are not married they will want all LLC members on the loan if they own more than 20% of the LLC (the exact percentage can vary by lender). Not all lenders will report the DSCR loan on credit unless there's missed payments. I've never seen a DSCR heloc that funds. The exact details can vary by lender. Conventional loans can not be made in an LLC's name.
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
7mo
@Prashant Kumar The loan officer is referring to the personal guarantee. Even when the property is titled to an LLC the lender will expect the members to personally guarantee the loan. Depending on how the operating agreement is drafted and the lender's internal policies one or only a few members may be required to personally guarantee the loan, instead of all 5 members of the LLC. I don't see a situation where you're avoiding a personal guarantee on a real estate loan.
I along with a 4 friends formed an LLC to invest in rental properties. We have bought 2 properties and are looking at taking loans for buying our next property. However, we were told by a mortgage broker, that we cannot take a regular loan on the LLC, even if its against the properties. All the 5 members of the LLC would be liable for the full loan amount each. i.e. if the loan is 200K, then each member will have a loan of $200K on their names.
I was told that there are options for taking DSCR loans in the name of the LLC including taking HELOC or similar loans against the 2 properties. I wanted to check, is this possible, where none of the 5 members, have the loan reflected on them, and the loan is purely against the LLC. How does this work?
The ideas is to use the equity in the 2 current rental properties and get a loan against that. Any guidance will be appreciated.
Prashant, this is the beauty of this community: you get different opinions. Some correct and some bizarre. I am confused as to what this broker means. So let me clarify. In DSCR loans, you can have as many entity members as you desire. Typically, you will have one or maybe two sponsors / gurantors on the loan itself. They are the ones whose credit and experience is used to get the terms established. Depending on which lender you choose, you will either have reporting or non reporintg loan options (meaning, the debt is reported to personal credit). The best lender IMO is all LLC non-reporting. IF you have 5 entity members and 1 of them has 50% ownership, and the other have 12.5% resepctively, then it is the 50% member whose credit is used to qualify the loan. However, the debt and the mortgage are still reported on the entity/business, not all the members, as you have expressed. You can manipulate the owqwernhisp % expressed at any point yoy would like to qualify with lenders, it's your company - no one bank can mandate how often you change or what members have what %. There is a strategy to it, so work with a broker who actually knows the ins and outs of guidelines and can steer you clear of trouble. happy to chat further, good luck!
Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
7mo
Yes - taking a loan with the borrower being an LLC with a DSCR loan is possible. What you and your partners will need to figure out is who needs to be a guarantor. Oftentimes DSCR lenders will require anyone with more than 25% of the borrowing entity to guarantee the loan. Happy to chat further about what this entails and how to best structure your entity for DSCR lending purposes.
I along with a 4 friends formed an LLC to invest in rental properties. We have bought 2 properties and are looking at taking loans for buying our next property. However, we were told by a mortgage broker, that we cannot take a regular loan on the LLC, even if its against the properties. All the 5 members of the LLC would be liable for the full loan amount each. i.e. if the loan is 200K, then each member will have a loan of $200K on their names.
I was told that there are options for taking DSCR loans in the name of the LLC including taking HELOC or similar loans against the 2 properties. I wanted to check, is this possible, where none of the 5 members, have the loan reflected on them, and the loan is purely against the LLC. How does this work?
The ideas is to use the equity in the 2 current rental properties and get a loan against that. Any guidance will be appreciated.
Hey Prashant,
Typically most DSCR lenders will only allow 4 members in an LLC. There is exceptions to this rule as long as the main PG owns majority of the LLC.
Additionally, most lenders will make all non-borrowing members sign a pg at closing. Again, there are exceptions to this rule depending on how you format your LLC.
Lastly, some lenders will use the highest FICO score to qualify, while others will use the lower credit score.
I would recommend talking to more lenders/brokers on this subject as you will get very different answers.
Lender · Marlboro, NJ · Member since 2025 · 239 posts · 146 votes
7mo
This is a very common misunderstanding, so I’ll break it down cleanly.
1. You generally cannot get a “regular” (conventional) loan in an LLC Conventional agency loans are made to individuals. Once a property is owned by an LLC, you're in non-QM / commercial territory, which is where DSCR lives.
2. With DSCR loans, the borrower is the LLC The note and mortgage are in the LLC's name. The loan does not report to personal credit like a conventional mortgage.
3. Personal guarantees are normal, but that does NOT mean five separate loans Most DSCR lenders will require personal guarantees from one or more members of the LLC, especially on small-balance deals. That does not mean each member has a $200k loan on their credit report. It means they are guarantors on a single LLC loan.
4. True non-recourse is possible, but rare and restrictive If your goal is zero personal liability for all members, that exists only with:
Lower leverage (typically 50–65% LTV)
Strong DSCR
Clean operating history
Usually higher loan balances These executions are closer to small-balance commercial than standard DSCR.
5. Using equity from existing rentals is feasible via DSCR cash-out You can absolutely pull equity from the two existing rentals using a DSCR cash-out refinance, assuming the properties support the debt from a cash-flow perspective.
6. HELOCs on LLC-owned investment properties are very limited True HELOCs on LLC-owned rentals are uncommon. When available, they usually come with:
Personal guarantees
Lower LTV
Higher rates In most cases, a DSCR cash-out refi is the more realistic option.
Bottom line: Yes, you can borrow in the name of the LLC and generally keep the loan off personal credit reports. However, some level of personal guarantee is still standard unless you're pursuing a true non-recourse structure, which comes with tighter constraints.
The right structure depends on leverage, DSCR, loan size, and how the LLC ownership is set up.
I along with a 4 friends formed an LLC to invest in rental properties. We have bought 2 properties and are looking at taking loans for buying our next property. However, we were told by a mortgage broker, that we cannot take a regular loan on the LLC, even if its against the properties. All the 5 members of the LLC would be liable for the full loan amount each. i.e. if the loan is 200K, then each member will have a loan of $200K on their names.
I was told that there are options for taking DSCR loans in the name of the LLC including taking HELOC or similar loans against the 2 properties. I wanted to check, is this possible, where none of the 5 members, have the loan reflected on them, and the loan is purely against the LLC. How does this work?
The ideas is to use the equity in the 2 current rental properties and get a loan against that. Any guidance will be appreciated.
Hey @Prashant Kumar, Welcome to BP! Congrats on your first steps into rental property investing!
What your broker explained is accurate for traditional mortgage loans—most conventional lenders require personal guarantees from each LLC member, so the loan appears on individual credit reports. That's why each member would technically be on the hook for the full amount.
However, there are options to finance in the name of the LLC without personal guarantees:
DSCR / Asset-Based Loans – Many lenders will make loans based on the property's income (Debt Service Coverage Ratio) rather than personal income. These loans can be issued directly to the LLC, with the property as collateral. Personal guarantees are sometimes required, but there are programs that minimize or avoid them.
HELOC / Cash-Out Refinance on Existing Properties – If your current rentals have equity, some lenders will allow the LLC to take a line of credit or refinance against those properties. This can free up funds for new acquisitions while keeping the loan largely at the LLC level.
Structuring & Underwriting – Lenders will typically want:
• Proof of LLC ownership and operating agreement
• Financials for the LLC and properties (rent rolls, expenses)
• Proper insurance and title documentation
The key is finding a lender familiar with investment LLCs and cash-flow-based lending, as not all banks or brokers are set up for this. With the right lender, you can leverage equity in existing properties and have the loan primarily on the LLC rather than individual members. Best of luck!
Lender · NY · Member since 2026 · 5 posts · 0 votes
6mo
For sure, most DSCR lenders will lend to a multi-member LLC. The loan can close in the LLC's name, but you should still expect a personal guarantee from one or more members (often anyone 25%+ or the majority owners). That's standard for business-purpose lending.
If your concern is liability, remember the guarantee is separate from the real estate. The lender's primary protection is the property and its cash flow. If you're buying right and not over-leveraging, the guarantee shouldn't be what stops you. The real risk is stretching the deal too thin, not the LLC structure itself.
Good question — this is a common point of confusion when investors move from buying in their personal names to using an LLC.
A couple of key points to clear up how this typically works:
With most DSCR / investment lenders, the loan is made to the LLC, but one or more members are still asked to sign as personal guarantors. In practice, that means the entity is on the note, and the guarantors are backing the repayment if the LLC ever defaults.
It is rare to find a true “no‑guarantor” structure on 1–4 unit investor loans, and when you do, it usually comes with higher rates, lower leverage, or more institutional/portfolio‑style underwriting.
Even with a personal guarantee, many DSCR lenders do not report the loan on the guarantor's personal credit profile as long as the loan remains in good standing, which helps protect personal DTI for future conventional borrowing.
On the equity side:
You can often use DSCR‑style cash‑out refinances on your existing rentals held in the LLC to pull out equity for the next purchase, as long as the properties debt‑service based on current or market rents.
HELOCs directly on investment properties in an LLC are less common with traditional banks, but some business‑purpose lenders do offer DSCR‑based HELOC or line‑of‑credit products secured by rental properties. Terms and availability vary a lot by lender.
Practically, what this means for your group of five:
You can almost certainly structure future DSCR loans in the LLC's name.
You should expect at least one (and sometimes more than one) member to personally guarantee, but you can work with a lender to decide who that is based on credit, experience, and how your operating agreement is set up.
If keeping everyone's personal credit as clean as possible is the main goal, that's something to discuss upfront with any DSCR lender so you understand how they report and who needs to sign.
If it would be helpful, I'm happy to walk through a sample structure for your two existing properties (LTV, DSCR, and rough cash‑out potential) so you can see what kind of leverage and terms might be realistic for your next purchase.
Lender · Grasonville, MD · Member since 2025 · 70 posts · 16 votes
5mo
Hi Prashant,
When you have multiple members, any member with 20% or more ownership is a guarantor. An example, if one member had 60% ownership, and the other 4 had 10%, just that one member would be the guarantor.
I have a similar situation and question. Except in my case, the titles to the properties are held by a Realty Trust with the LLC as the beneficiary. The LLC holds the bank accounts and operations are managed by LLC, but the title (as I understand it) is technically held by the Trust. Any advice on this situation? How would DSCR or other lenders respond to this?
I have a similar situation and question. Except in my case, the titles to the properties are held by a Realty Trust with the LLC as the beneficiary. The LLC holds the bank accounts and operations are managed by LLC, but the title (as I understand it) is technically held by the Trust. Any advice on this situation? How would DSCR or other lenders respond to this?
Is the LLC inside the trust or are they separate entities? We can work with this either way.
I have a similar situation and question. Except in my case, the titles to the properties are held by a Realty Trust with the LLC as the beneficiary. The LLC holds the bank accounts and operations are managed by LLC, but the title (as I understand it) is technically held by the Trust. Any advice on this situation? How would DSCR or other lenders respond to this?
This structure is workable with DSCR lenders but it does narrow your options. Since title sits in the trust, lenders will want the full trust docs The LLC-as-beneficiary is fine as long as the paper trail is clean. A few lenders will require the trust to be listed as co-borrower. Some stricter shops will want the property deeded into the LLC before closing, which can trigger transfer taxes depending on your state which is worth knowing upfront. Personal guarantee requirement doesn't go away regardless of structure.
I have a similar situation and question. Except in my case, the titles to the properties are held by a Realty Trust with the LLC as the beneficiary. The LLC holds the bank accounts and operations are managed by LLC, but the title (as I understand it) is technically held by the Trust. Any advice on this situation? How would DSCR or other lenders respond to this?
Hey Robin, good question – this comes up a lot with investors who use trusts and entities for privacy and liability protection.
From a lender perspective, most DSCR and other investment-property lenders care primarily about: who is the beneficial owner, who is signing the personal guarantee, and which entity will actually be the borrower on the note. In a lot of cases, the loan is made to the LLC (as borrower), with the managing member(s) signing a personal guarantee, and the title either vesting directly in the LLC or in a trust where the LLC is the beneficiary.
When a realty/land trust holds title and an LLC is the beneficiary, some DSCR lenders are fine with that structure as long as:
They can review the trust agreement and confirm the LLC is the beneficiary.
The LLC (and its managing member) has authority under the operating agreement to borrow and to encumber the property.
The person signing the loan docs and guarantee clearly has signing authority for the LLC.
Where things can get sticky is if:
The trust language restricts transfer or encumbrance,
The beneficial interest is split among multiple parties in a way that’s unclear, or
The lender's underwriting guidelines simply don't permit trust vesting and they require title to move into the LLC at or before closing.
So practically, you’ll usually see one of two approaches:
Title is moved from the trust into the LLC at closing so everything (note, mortgage/deed of trust, title) lines up in the LLC's name, or
Title remains in the trust, but the loan docs make clear the borrower is the LLC, with the managing member guaranteeing and the trust documents on file to show the relationship.
On the market side, since you mentioned Cleveland, one thing I’d add for anyone reading this thread: it can be a great market, but it’s also a tough place for out‑of‑area investors who don’t have solid local boots on the ground. There are plenty of BiggerPockets threads from people who struggled there due to property management, contractor quality, neighborhood‑by‑neighborhood differences, and expectations not matching reality when buying from afar. My general advice is that if you’re not local, either build a very strong local team first or consider starting in a market where you already spend time and understand the submarkets on a street‑level basis.
Every lender’s tolerance for trusts and entity structures is a little different, so the best next step is usually to:
Confirm how your current lender wants title vested at closing.
Have your attorney or title company walk through the trust and LLC docs so there are no surprises.
Make sure your operating agreement clearly authorizes borrowing and granting a mortgage/deed of trust.
If you'd like, I'm happy to share how I've seen other investors structure DSCR loans with multi‑member LLCs and trusts so you can compare options and questions to bring back to your lender and attorney.
I along with a 4 friends formed an LLC to invest in rental properties. We have bought 2 properties and are looking at taking loans for buying our next property. However, we were told by a mortgage broker, that we cannot take a regular loan on the LLC, even if its against the properties. All the 5 members of the LLC would be liable for the full loan amount each. i.e. if the loan is 200K, then each member will have a loan of $200K on their names.
I was told that there are options for taking DSCR loans in the name of the LLC including taking HELOC or similar loans against the 2 properties. I wanted to check, is this possible, where none of the 5 members, have the loan reflected on them, and the loan is purely against the LLC. How does this work?
The ideas is to use the equity in the 2 current rental properties and get a loan against that. Any guidance will be appreciated.
DSCR loans are commonly made to an LLC, but that does not always mean the members are completely removed from the loan structure. Many lenders still require a personal guaranty from the managing members or owners above a certain ownership percentage.
For a multi-member LLC, I'd expect lenders to review the operating agreement, ownership percentages, authorized signer, title vesting, leases/rent, taxes, insurance, and DSCR support. Some lenders may be more flexible than others, but "purely against the LLC" with no member involvement is usually harder to find.
If the goal is to pull equity from the two rentals, I'd compare a DSCR cash-out refinance, HELOC-style option, or portfolio structure depending on title and ownership.
Banker · MA · Member since 2026 · 120 posts · 31 votes
3mo
Great question, and good news — this is exactly the scenario DSCR loans were built for.
**How DSCR loans work for a multi-member LLC**
A true DSCR loan is underwritten based on the property's income relative to its debt service — not on any individual member's personal income or DTI. Many DSCR programs will lend directly to an LLC as the borrowing entity. That means:
- The note is in the LLC's name, not in the names of the individual members
- The debt generally does **not** appear on the members' personal credit reports
- Qualification centers on the property's rent-to-PITIA ratio (most lenders want a DSCR of 1.0–1.25 or better)
- Personal guarantees are almost always still required — but a personal guarantee and a tradeline showing on your credit are two different things
That last point is worth underlining. Most lenders will require each member (or at minimum the managing member/majority owner) to sign a personal guarantee. So personal liability doesn't disappear — it just doesn't show up as a tradeline dragging your DTI or credit utilization.
**Using equity from your existing rentals**
A cash-out refinance on one or both of your existing properties under a DSCR structure is a legitimate path here. You'd pull equity out, the LLC receives the proceeds, and you deploy that toward the next acquisition. A DSCR HELOC on an investment property is a less common product and harder to place, so a cash-out refi is typically the cleaner execution.
With 31 years in the mortgage business, I've structured a lot of these for investor groups — the key is making sure the DSCR on each property holds up after the new debt service, so modeling that before you pull the trigger matters.
Hope this helps — feel free to DM me if you want to walk through the numbers on your specific properties.
