How to get financing for two homes bought with cash?

Question

I bought two houses last year with cash. I bought with cash because rates were high and I was able to close quick and get significant under asking.

I did significant repairs and increased the value of the homes by 20% at least. I would like my money back but they are quoting me like a 7% rate because they are investment properties and it’s a cash out refinance.

It looks like my other options are small business loan but I’m trying to get more like a $700K loan (two houses combined are worth ~$1M) and I don’t think I can get there. Plus rates are also not amazing.

Or possibly jumbo portfolio loan, because I also have $300K in equity in my primary home and $1M in the stock market.

I have over $2M in net worth but feel cash strapped and don’t know what to do. Any advice?

Stacy Raskin · Answer

Depending on your credit and the LTV, you might be able to get a lower than 7% rate as of the date of this posting. Rates for the same credit profile will always be higher for a cash out refinance versus a purchase. It's because the lender associates giving the borrower a bunch of cash as riskier for repayment versus a purchase loan. Depending on how long it was since the purchase (the seasoning period), there can be options to use the new appraised value versus the purchase price for the value of the property. DSCR loans have shorter seasoning periods compared to conventional loans for cash out refinances. They also use the rents to structure the loan versus your income and debt to income (DTI) ratios to qualify. Happy to connect to discuss further.

Raymond J. Rodrigues · Answer

@Diangelo Castro hello fellow local Miamian. My lending sources that I've worked with in the past have rates starting in the low 6's. Happy to connect you with them. Feel free to message me.

Matthew Bernal · Answer

The 7% rate is market rate for DSCR cash-out on investment properties right now — that part is accurate. The question is whether the structure they quoted you is the right one.

Two separate DSCR cash-out refis — one per property — is usually cleaner than trying to bundle $700K into one loan. Keeps you within standard program limits, simpler underwriting, and you can sequence them if needed.

At 70% LTV on combined $1M value the numbers work. Your net worth and liquid assets also make you a strong borrower profile for DSCR underwriting.

Happy to run through both properties and show you what the structure looks like.

What are the approximate values of each property individually?

Patrick Roberts · Answer

Most investment loans will be 6%+ for the foreseeable future.

Erik Estrada · Answer

What rate would make your deal work?

Hannah Wollmershauser · Answer

Hi Diangelo, it really depends on the leverage you are looking for and your credit score but typical DSCR rates are starting in the 6's, sometimes 5's. I would highly recommend this type of loan for your rentals as you can get the cash back you are looking for, refinance a fairly good rate, and go off of the ARV post rehab.

Hope this helps!

Brian Cauldwell · Answer

Depending on the LTV and your credit score, you could get around 6% today. I am not sure if that moves the needle enough for you.

Brian Cauldwell · Answer

If they are rental properties, you could do a DSCR loan. We do this all the time. Many DSCR lenders will use the cash-out proceeds as your liquidity, so you won't need to show reserves.

How to get financing for two homes bought with cash?

How to get financing for two homes bought with cash?

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