DSCR vs Conventional, and Direct vs Broker

[Colin McCarthy]

I'm currently shopping to refinance my first investment property, which is a BRRRR SFH I bought with cash. The rehab only took 3 months, so I'm considering my options. I want a 30y fixed loan. Here's what I've found so far:

Conventional from CU: 7%, $1650 fees, 6 month seasoning (so 3 additional months before I can refinance)

DSCR from broker: 6.75%, $5350 fees, seasoning already complete

Here are my questions:

1) Is it possible to find a DSCR with less fees but still only 3 months seasoning? Maybe by going directly to a lender instead of through a broker? I don't know where to find a lender for this though.

2) If I can't find a DSCR with a comparable rate and less fees, is it worth eating the fees to get the lower rate and get my money out sooner?

[J Castro]

From a lender’s perspective, I would encourage you to look beyond just the interest rate and closing costs and focus on the opportunity cost of having your capital tied up for another three months.

The conventional option certainly has attractive fees, but if waiting for seasoning prevents you from acquiring another property, completing another BRRRR, or deploying capital into a higher-return opportunity, the true cost may be much greater than the additional fees associated with a DSCR loan.

It’s also important to remember that DSCR loan fees can vary significantly from lender to lender. Factors such as loan amount, leverage, property type, credit profile, and seasoning history can all impact pricing and closing costs. For that reason, I wouldn’t assume one quote represents the entire DSCR market.

As for direct lender versus broker, both can have advantages. Some direct lenders offer competitive pricing, while experienced brokers may have access to multiple programs and can help identify the best fit for your specific scenario. The key is comparing the overall loan structure and economics rather than focusing solely on the rate or fees.

I’d encourage you to reach out and discuss your goals. We’d be happy to review your current situation, run the numbers, and provide preliminary loan terms based on the loan amount, property, and investment strategy. Having a side-by-side comparison of your available options can help you make an informed decision and determine whether accessing your equity sooner outweighs the cost of waiting for conventional financing.

Every deal is different, and sometimes the best financing option isn’t the one with the lowest fee—it’s the one that helps you achieve your investment goals most efficiently.